Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-09645
Columbia Funds Series Trust
(Exact name of registrant as specified in charter)
225 Franklin Street
Boston, Massachusetts 02110
(Address of principal executive offices) (Zip code)
Christopher O. Petersen, Esq.
c/o Columbia Management Investment Advisers, LLC
225 Franklin Street
Boston, Massachusetts 02110
Ryan C. Larrenaga, Esq.
c/o Columbia Management Investment Advisers, LLC
225 Franklin Street
Boston, MA 02110
(Name and address of agent for service)
Registrant’s telephone number, including area code: (800) 345-6611
Date of fiscal year end: April 30
Date of reporting period: April 30, 2019
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
Table of Contents
Item 1. Reports to Stockholders.
Table of Contents
Annual
Report
April 30, 2019
April 30, 2019
Columbia California Intermediate Municipal
Bond Fund
(formerly Columbia AMT-Free
California Intermediate Muni Bond Fund)
Beginning on January 1, 2021, as permitted by regulations
adopted by the Securities and Exchange Commission, paper copies of the Fund’s annual and semiannual shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the
reports will be made available on the Fund’s website (columbiathreadneedleus.com/investor/), and each time a report is posted you will be notified by mail and provided with a website address to access the report.
If you have already elected to receive shareholder reports
electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically at any time by contacting your financial intermediary (such
as a broker-dealer or bank) or, for Fund shares held directly with the Fund, by calling 800.345.6611 or by enrolling in “eDelivery” by logging into your account at columbiathreadneedleus.com/investor/.
You may elect to receive all future reports in paper free of
charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue receiving paper copies of your shareholder reports. If you invest directly with the Fund, you can call 800.345.6611 to
let the Fund know you wish to continue receiving paper copies of your shareholder reports. Your election to receive paper reports will apply to all Columbia Funds held in your account if you invest through a financial intermediary or all Columbia
Funds held with the fund complex if you invest directly with the Fund.
Not FDIC Insured • No bank guarantee • May lose
value
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Columbia California Intermediate Municipal Bond
Fund | Annual Report 2019
Table of Contents
Fund at a Glance
Investment objective
Columbia California Intermediate
Municipal Bond Fund (the Fund) seeks current income exempt from U.S. federal income tax and California individual income tax, consistent with moderate fluctuation of principal.
Portfolio
management
Paul Fuchs,
CFA
Lead
Portfolio Manager
Managed Fund
since 2012
Anders Myhran,
CFA
Portfolio
Manager
Managed Fund
since May 2019
Deborah
Vargo
Portfolio
Manager
Managed Fund
since 2017
Returns for Class A shares are shown
with and without the maximum initial sales charge of 3.00%. Returns for Class C shares are shown with and without the 1.00% contingent deferred sales charge for the first year only. The Fund’s other share classes are not subject to sales
charges and have limited eligibility. Please see the Fund’s prospectus for details. Performance for different share classes will vary based on differences in sales charges and fees associated with each share class. All results shown assume
reinvestment of distributions during the period. Returns do not reflect the deduction of taxes that a shareholder may pay on Fund distributions or on the redemption of Fund shares. Performance results reflect the effect of any fee waivers or
reimbursements of Fund expenses by Columbia Management Investment Advisers, LLC and/or any of its affiliates. Absent these fee waivers or expense reimbursement arrangements, performance results would have been lower.
The performance information shown represents past performance and
is not a guarantee of future results. The investment return and principal value of your investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than
the performance information shown. You may obtain performance information current to the most recent month-end by contacting your financial intermediary, visiting columbiathreadneedleus.com/investor/ or calling 800.345.6611.
| * | The returns shown for periods prior to the share class inception date (including returns for the Life of the Fund, if shown, which are since Fund inception) include the returns of the Fund’s oldest share class. These returns are adjusted to reflect any higher class-related operating expenses of the newer share classes, as applicable. Please visit columbiathreadneedleus.com/investor/investment-products/mutual-funds/appended-performance for more information. |
The Bloomberg Barclays California 3-15 Year Blend Municipal
Bond Index is an unmanaged index that tracks the performance of investment-grade bonds issued from the state of California and its municipalities.
The Bloomberg Barclays 3–15 Year Blend Municipal Bond
Index is an unmanaged index that tracks the performance of municipal bonds issued after December 31, 1990, with remaining maturities between 2 and 17 years and at least $7 million in principal amount outstanding.
Indices are not available for investment, are not
professionally managed and do not reflect sales charges, fees, brokerage commissions, taxes or other expenses of investing. Securities in the Fund may not match those in an index.
|
Columbia
California Intermediate Municipal Bond Fund | Annual Report 2019
|
3 |
Table of Contents
Fund at a Glance
(continued)
Performance of a
hypothetical $10,000 investment (April 30, 2009 — April 30, 2019)
The chart above shows the
change in value of a hypothetical $10,000 investment in Class A shares of Columbia California Intermediate Municipal Bond Fund during the stated time period, and does not reflect the deduction of taxes that a shareholder may pay on Fund
distributions or on the redemption of Fund shares.
| Quality breakdown (%) (at April 30, 2019) | |
| AAA rating | 2.6 |
| AA rating | 44.5 |
| A rating | 34.0 |
| BBB rating | 14.9 |
| BB rating | 1.8 |
| Not rated | 2.2 |
| Total | 100.0 |
Percentages indicated are based
upon total fixed income investments.
Bond ratings apply
to the underlying holdings of the Fund and not the Fund itself and are divided into categories ranging from highest to lowest credit quality, determined by using the middle rating of Moody’s, S&P and Fitch, after dropping the highest and
lowest available ratings. When ratings are available from only two rating agencies, the lower rating is used. When a rating is available from only one rating agency, that rating is used. When a bond is not rated by any rating agency, it is
designated as “Not rated.” Credit quality ratings assigned by a rating agency are subjective opinions, not statements of fact, and are subject to change, including daily. The ratings assigned by credit rating agencies are but one of the
considerations that the Investment Manager and/or Fund’s subadviser incorporates into its credit analysis process, along with such other issuer-specific factors as cash flows, capital structure and leverage ratios, ability to de-leverage
(repay) through free cash flow, quality of management, market positioning and access to capital, as well as such security-specific factors as the terms of the security (e.g., interest rate and time to maturity) and the amount and type of any
collateral.
| 4 | Columbia California Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Manager Discussion of Fund Performance
During the 12-month period that ended April 30, 2019, the
Fund’s Class A shares returned 5.00% excluding sales charges, and its Institutional shares returned 5.27%. During the same 12-month period, the Bloomberg Barclays California 3-15 Year Blend Municipal Bond Index returned 5.57%, and the
Bloomberg Barclays 3-15 Year Blend Municipal Bond Index returned 5.91%. California intermediate-term municipal bonds trailed the national market across the maturity and quality spectrum, largely as a result of relative weakness among general
obligation issues.
Market overview
Municipal bonds generated healthy gains in the 12-month
reporting period, with the bulk of the rally occurring from November 2018 onward. Municipals performed reasonably well from May through August on the strength of falling U.S. Treasury yields and the combination of strong investor demand and reduced
new-issue supply in the tax-exempt market. Conditions became less favorable in September, when U.S. Treasury yields climbed on indications of continued strength in the U.S. economy and fears about inflation pressures that could result from a trade
war with China. The negative trend persisted in October, as yields continued to rise on concerns that the U.S. Federal Reserve (Fed) would take a more aggressive approach to raising interest rates in 2019 than investors had been expecting.
Sentiment again shifted abruptly in early November, causing
yields to fall sharply through the end of 2018. The fixed-income markets rallied significantly due to signs of slowing global growth, volatility in the higher risk assets, and expectations that the Fed would in fact adopt a more accommodative
stance. In addition, various geopolitical factors, including uncertainty surrounding the U.S.-China trade dispute, Brexit negotiations, and the U.S. government shutdown, fueled a “flight to quality” into bonds. Municipals rallied as a
result, helping the major national indexes finish 2018 in positive territory.
The rally continued into the New Year, leading to the largest
first-quarter gain for the tax-exempt market since 2014. The first quarter of 2019 was also the sixth-best for municipals in the past 30 years. During this time, bonds were well supported by the backdrop of slow global growth and the increasingly
accommodative policies of the world’s major central banks. Supply-and-demand factors also remained highly favorable. Municipals rallied further in April, helping them to post a solid gain for the full 12 months.
Longer term bonds outpaced shorter term issues in the period,
mirroring trends in the Treasury market, while lower quality bonds strongly outperformed their higher rated counterparts. The “risk-on” environment of January to April led to robust investor demand for higher risk assets, lifting the
returns of higher yielding bonds in all fixed-income categories.
California’s municipal bond market
underperformed
California intermediate-term municipals
trailed the national market across the maturity and quality spectrum. The relative weakness of general obligation issues, which made up the largest sector weighting in the benchmark at over 25%, was the primary driver of underperformance. However,
the state continued to make progress in terms of both its economy and its fiscal position. The new governor released a budget proposal for the 2019-2020 fiscal year that gave priority to debt reduction and one-time spending, alleviating some
concerns of significant increase in recurring spending. On the other hand, uncertainty surrounding trade policy was a headwind for the market due to its potential impact on the state’s exports. Unresolved trade disputes also translated to
increased volatility in the financial markets, which affected the personal income tax revenue collection — primarily capital gains — that California relies on to a great extent. At the local level, rising labor costs, particularly from
annual pension contributions, consumed a larger percentage of local governments’ fiscal resources. This trend could prove to be a serious challenge to local municipalities if tax revenue growth decelerates.
Contributors and detractors
Given the outperformance for longer maturity and lower rated
investment-grade bonds, the Fund benefitted from its overweights in A and BBB rated issues, as well as those maturing in 12 years and longer. At the sector level, the Fund’s holdings in transportation, education, and special property tax
issues, the three largest sector weightings in the portfolio, produced returns meaningfully above the benchmark. All three areas benefited from a high representation of A and BBB rated securities.
The Fund was also helped by our decision to increase portfolio
duration (interest-rate sensitivity) over the course of the period. This shift strongly aided performance in the market rally that occurred in the second half of the period.
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Columbia
California Intermediate Municipal Bond Fund | Annual Report 2019
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5 |
Table of Contents
Manager Discussion of Fund Performance
(continued)
The Fund’s allocation to bonds maturing in less than two
years detracted from performance, as these holdings produced much smaller gains than the benchmark. We reduced the size of this position as the period progressed, while increasing the Fund’s weighting in bonds with maturities of ten years and
longer. We made a corresponding reduction to the Fund’s position in pre-refunded securities, which tend to have maturities of two years and shorter.
Fund positioning
At the close of the period, we were fairly comfortable with
the overall interest rate environment due to the combination of muted inflation, the late stage of the economic expansion, and the Fed’s signals that it intends to remain on hold through the end of 2019. In addition, ongoing geopolitical
issues, including trade negotiations with China, Brexit uncertainty, and Washington infighting, continued to put downward pressure on interest rates. With this as the backdrop, we continued to favor opportunities on the longer end of the
intermediate-term range due to their higher income. The Fund’s quality profile was tilted toward the lower rated portion of the investment-grade market, with meaningful weightings in the hospital, special property tax, transportation, and
education sectors.
Fixed-income securities present
issuer
default risk. The Fund invests substantially in
municipal securities
and will be affected by tax, legislative, regulatory, demographic or political changes, as well as
changes impacting a state’s financial, economic or other conditions. A relatively small number of tax-exempt issuers may necessitate the Fund investing more heavily in a single issuer and, therefore, be more exposed to the risk of loss than a
fund that invests more broadly. The value of the Fund’s portfolio may be more volatile than a more
geographically diversified
fund.
Prepayment and extension
risk
exists because the timing of payments on a loan, bond or other investment may accelerate when interest rates fall or decelerate when interest rates rise which may reduce investment opportunities and potential returns. A rise in
interest rates
may result in a price decline of fixed-income instruments held by the Fund, negatively impacting its performance and NAV. Falling rates may result in the Fund investing in lower yielding debt
instruments, lowering the Fund’s income and yield. These risks may be heightened for longer maturity and duration securities.
Non-investment-grade
(high-yield or junk) securities present greater price
volatility and more risk to principal and income than higher rated securities.
Market
risk may affect a single issuer, sector of the economy, industry or the market as a whole. Federal and state
tax
rules apply to capital gain distributions and any gains or losses on sales. Income may be subject to state or local taxes.
Liquidity
risk is associated with the difficulty
of selling investments at a desirable time or price. See the Fund’s prospectus for more information on these and other risks.
The views expressed in this report reflect the current views of
the respective parties. These views are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict, so actual outcomes and results may differ significantly from the views expressed.
These views are subject to change at any time based upon economic, market or other conditions and the respective parties disclaim any responsibility to update such views. These views may not be relied on as investment advice and, because investment
decisions for a Columbia fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any particular Columbia fund. References to specific securities should not be construed as a recommendation or
investment advice.
| 6 | Columbia California Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Understanding Your Fund’s Expenses
(Unaudited)
(Unaudited)
As an investor, you incur two types of costs. There are
shareholder transaction costs, which generally include sales charges on purchases and may include redemption fees. There are also ongoing fund costs, which generally include management fees, distribution and/or service fees, and other fund expenses.
The following information is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to help you compare these costs with the ongoing costs of investing in other mutual funds.
Analyzing your Fund’s expenses
To illustrate these ongoing costs, we have provided examples
and calculated the expenses paid by investors in each share class of the Fund during the period. The actual and hypothetical information in the table is based on an initial investment of $1,000 at the beginning of the period indicated and held for
the entire period. Expense information is calculated two ways and each method provides you with different information. The amount listed in the “Actual” column is calculated using the Fund’s actual operating expenses and total
return for the period. You may use the Actual information, together with the amount invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000
= 8.6), then multiply the results by the expenses paid during the period under the “Actual” column. The amount listed in the “Hypothetical” column assumes a 5% annual rate of return before expenses (which is not the
Fund’s actual return) and then applies the Fund’s actual expense ratio for the period to the hypothetical return. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end
of the period or the expenses you paid during the period. See “Compare with other funds” below for details on how to use the hypothetical data.
Compare with other funds
Since all mutual funds are required to include the same
hypothetical calculations about expenses in shareholder reports, you can use this information to compare the ongoing cost of investing in the Fund with other funds. To do so, compare the hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of other funds. As you compare hypothetical examples of other funds, it is important to note that hypothetical examples are meant to highlight the ongoing costs of investing in a fund only and do not reflect any
transaction costs, such as sales charges, or redemption or exchange fees. Therefore, the hypothetical calculations are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. If
transaction costs were included in these calculations, your costs would be higher.
Expenses paid during the period
are equal to the annualized expense ratio for each class as indicated above, multiplied by the average account value over the period and then multiplied by the number of days in the Fund’s most recent fiscal half year and divided by 365.
Expenses do not include fees and expenses incurred indirectly
by the Fund from its investment in underlying funds, including affiliated and non-affiliated pooled investment vehicles, such as mutual funds and exchange-traded funds.
Had Columbia Management Investment Advisers, LLC and/or certain
of its affiliates not waived/reimbursed certain fees and expenses, account value at the end of the period would have been reduced.
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Columbia
California Intermediate Municipal Bond Fund | Annual Report 2019
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Table of Contents
Portfolio of Investments
April 30, 2019
April 30, 2019
(Percentages represent value of investments compared to net
assets)
Investments in securities
The accompanying Notes to Financial Statements are an integral part
of this statement.
| 8 | Columbia California Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Portfolio of Investments
(continued)
April 30, 2019
April 30, 2019
The accompanying Notes to Financial Statements are an integral part
of this statement.
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Columbia
California Intermediate Municipal Bond Fund | Annual Report 2019
|
9 |
Table of Contents
Portfolio of Investments
(continued)
April 30, 2019
April 30, 2019
The accompanying Notes to Financial Statements are an integral part
of this statement.
| 10 | Columbia California Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Portfolio of Investments
(continued)
April 30, 2019
April 30, 2019
The accompanying Notes to Financial Statements are an integral part
of this statement.
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Columbia
California Intermediate Municipal Bond Fund | Annual Report 2019
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11 |
Table of Contents
Portfolio of Investments
(continued)
April 30, 2019
April 30, 2019
The accompanying Notes to Financial Statements are an integral part
of this statement.
| 12 | Columbia California Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Portfolio of Investments
(continued)
April 30, 2019
April 30, 2019
The accompanying Notes to Financial Statements are an integral part
of this statement.
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Columbia
California Intermediate Municipal Bond Fund | Annual Report 2019
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13 |
Table of Contents
Portfolio of Investments
(continued)
April 30, 2019
April 30, 2019
The accompanying Notes to Financial Statements are an integral part
of this statement.
| 14 | Columbia California Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Portfolio of Investments
(continued)
April 30, 2019
April 30, 2019
The accompanying Notes to Financial Statements are an integral part
of this statement.
|
Columbia
California Intermediate Municipal Bond Fund | Annual Report 2019
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15 |
Table of Contents
Portfolio of Investments
(continued)
April 30, 2019
April 30, 2019
The accompanying Notes to Financial Statements are an integral part
of this statement.
| 16 | Columbia California Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Portfolio of Investments
(continued)
April 30, 2019
April 30, 2019
| Money Market Funds 0.9% | ||
| Shares | Value ($) | |
| Dreyfus Tax-Exempt Cash Management Fund, Institutional Shares, 1.981% (f) | 3,673,451 | 3,673,451 |
|
Total
Money Market Funds
(Cost $3,673,451) |
3,673,451 | |
|
Total
Investments in Securities
(Cost: $390,258,907) |
409,854,068 | |
| Other Assets & Liabilities, Net | (7,272,886) | |
| Net Assets | 402,581,182 | |
Notes to Portfolio of Investments
| (a) | The Fund is entitled to receive principal and interest from the guarantor after a day or a week’s notice or upon maturity. The maturity date disclosed represents the final maturity. |
| (b) | Represents a variable rate security where the coupon rate adjusts on specified dates (generally daily or weekly) using the prevailing money market rate. The interest rate shown was the current rate as of April 30, 2019. |
| (c) | Represents privately placed and other securities and instruments exempt from Securities and Exchange Commission registration (collectively, private placements), such as Section 4(a)(2) and Rule 144A eligible securities, which are often sold only to qualified institutional buyers. The Fund may invest in private placements determined to be liquid as well as those determined to be illiquid. Private placements may be determined to be liquid under guidelines established by the Fund’s Board of Trustees. At April 30, 2019, the total value of these securities amounted to $21,829,245, which represents 5.42% of total net assets. |
| (d) | Zero coupon bond. |
| (e) | Represents a security purchased on a when-issued basis. |
| (f) | The rate shown is the seven-day current annualized yield at April 30, 2019. |
The accompanying Notes to Financial Statements are an integral part of this
statement.
|
Columbia
California Intermediate Municipal Bond Fund | Annual Report 2019
|
17 |
Table of Contents
Portfolio of Investments
(continued)
April 30, 2019
April 30, 2019
Abbreviation Legend
| AGM | Assured Guaranty Municipal Corporation |
| AMBAC | Ambac Assurance Corporation |
| BAM | Build America Mutual Assurance Co. |
| NPFGC | National Public Finance Guarantee Corporation |
Fair value measurements
The Fund categorizes its fair value measurements according to
a three-level hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs by prioritizing that the most observable input be used when available. Observable inputs are those that market participants would use in
pricing an investment based on market data obtained from sources independent of the reporting entity. Unobservable inputs are those that reflect the Fund’s assumptions about the information market participants would use in pricing an
investment. An investment’s level within the fair value hierarchy is based on the lowest level of any input that is deemed significant to the asset’s or liability’s fair value measurement. The input levels are not necessarily an
indication of the risk or liquidity associated with investments at that level. For example, certain U.S. government securities are generally high quality and liquid, however, they are reflected as Level 2 because the inputs used to determine fair
value may not always be quoted prices in an active market.
Fair value inputs are summarized in the three broad levels
listed below:
| ■ | Level 1 — Valuations based on quoted prices for investments in active markets that the Fund has the ability to access at the measurement date. Valuation adjustments are not applied to Level 1 investments. |
| ■ | Level 2 — Valuations based on other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risks, etc.). |
| ■ | Level 3 — Valuations based on significant unobservable inputs (including the Fund’s own assumptions and judgment in determining the fair value of investments). |
Inputs that are used in determining fair value of an investment
may include price information, credit data, volatility statistics, and other factors. These inputs can be either observable or unobservable. The availability of observable inputs can vary between investments, and is affected by various factors such
as the type of investment, and the volume and level of activity for that investment or similar investments in the marketplace. The inputs will be considered by the Investment Manager, along with any other relevant factors in the calculation of an
investment’s fair value. The Fund uses prices and inputs that are current as of the measurement date, which may include periods of market dislocations. During these periods, the availability of prices and inputs may be reduced for many
investments. This condition could cause an investment to be reclassified between the various levels within the hierarchy.
Investments falling into the Level 3 category are primarily
supported by quoted prices from brokers and dealers participating in the market for those investments. However, these may be classified as Level 3 investments due to lack of market transparency and corroboration to support these quoted prices.
Additionally, valuation models may be used as the pricing source for any remaining investments classified as Level 3. These models may rely on one or more significant unobservable inputs and/or significant assumptions by the Investment Manager.
Inputs used in valuations may include, but are not limited to, financial statement analysis, capital account balances, discount rates and estimated cash flows, and comparable company data.
Under the direction of the Fund’s Board of Trustees (the
Board), the Investment Manager’s Valuation Committee (the Committee) is responsible for overseeing the valuation procedures approved by the Board. The Committee consists of voting and non-voting members from various groups within the
Investment Manager’s organization, including operations and accounting, trading and investments, compliance, risk management and legal.
The Committee meets at least monthly to review and approve
valuation matters, which may include a description of specific valuation determinations, data regarding pricing information received from approved pricing vendors and brokers and the results of Board-approved valuation control policies and
procedures (the Policies). The Policies address, among other things, instances when market quotations are or are not readily available, including recommendations of third party pricing vendors and a determination of appropriate pricing
methodologies; events that require specific valuation determinations and assessment of fair value techniques; securities with a potential for stale pricing, including those that are illiquid, restricted, or in default; and the effectiveness of third
party pricing vendors, including periodic reviews of vendors. The Committee meets more frequently, as needed, to discuss additional valuation matters, which may include the need to review back-testing results, review time-sensitive information or
approve related valuation actions. The Committee reports to the Board, with members of the Committee meeting with the Board at each of its regularly scheduled meetings to discuss valuation matters and actions during the period, similar to those
described earlier.
For investments categorized as Level
3, the Committee monitors information similar to that described above, which may include: (i) data specific to the issuer or comparable issuers, (ii) general market or specific sector news and (iii) quoted prices and specific or similar security
transactions. The Committee considers this data and any changes from prior periods in order to assess the reasonableness of observable and unobservable inputs, any assumptions or internal models used to value those securities and changes in fair
value. This data is also used to corroborate, when available, information received from approved pricing vendors and brokers. Various factors impact the frequency of monitoring this information (which may occur as often as daily). However, the
Committee may determine that changes to inputs, assumptions and models are not required as a result of the monitoring procedures performed.
The following table is a summary of the inputs used to value
the Fund’s investments at April 30, 2019:
|
Level
1
quoted prices in active markets for identical assets ($) |
Level
2
other significant observable inputs ($) |
Level
3
significant unobservable inputs ($) |
Total ($) | |
| Investments in Securities | ||||
| Floating Rate Notes | — | 18,145,000 | — | 18,145,000 |
| Municipal Bonds | — | 388,035,617 | — | 388,035,617 |
| Money Market Funds | 3,673,451 | — | — | 3,673,451 |
| Total Investments in Securities | 3,673,451 | 406,180,617 | — | 409,854,068 |
See the Portfolio of Investments for
all investment classifications not indicated in the table.
The accompanying Notes to Financial Statements are an integral part of this
statement.
| 18 | Columbia California Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Portfolio of Investments
(continued)
April 30, 2019
April 30, 2019
Fair value
measurements
(continued)
The Fund’s assets assigned to the Level 2 input category are generally valued using the market approach, in which a security’s value is determined through reference to prices and information from market transactions for similar or identical assets.
The Fund’s assets assigned to the Level 2 input category are generally valued using the market approach, in which a security’s value is determined through reference to prices and information from market transactions for similar or identical assets.
There were no transfers of financial assets between levels during
the period.
The accompanying Notes to Financial Statements are an integral part of this
statement.
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Columbia
California Intermediate Municipal Bond Fund | Annual Report 2019
|
19 |
Table of Contents
Statement of Assets and Liabilities
April 30, 2019
April 30, 2019
| Assets | |
| Investments in securities, at value | |
| Unaffiliated issuers (cost $390,258,907) | $409,854,068 |
| Cash | 43,021 |
| Receivable for: | |
| Investments sold | 135,125 |
| Capital shares sold | 667,046 |
| Interest | 4,503,230 |
| Expense reimbursement due from Investment Manager | 1,343 |
| Prepaid expenses | 769 |
| Total assets | 415,204,602 |
| Liabilities | |
| Payable for: | |
| Investments purchased | 1,935,816 |
| Investments purchased on a delayed delivery basis | 8,997,545 |
| Capital shares purchased | 600,620 |
| Distributions to shareholders | 913,281 |
| Management services fees | 5,149 |
| Distribution and/or service fees | 525 |
| Transfer agent fees | 44,593 |
| Compensation of board members | 82,956 |
| Other expenses | 42,935 |
| Total liabilities | 12,623,420 |
| Net assets applicable to outstanding capital stock | $402,581,182 |
| Represented by | |
| Paid in capital | 387,444,375 |
| Total distributable earnings (loss) (Note 2) | 15,136,807 |
| Total - representing net assets applicable to outstanding capital stock | $402,581,182 |
| Class A | |
| Net assets | $31,997,772 |
| Shares outstanding | 3,058,396 |
| Net asset value per share | $10.46 |
| Maximum sales charge | 3.00% |
| Maximum offering price per share (calculated by dividing the net asset value per share by 1.0 minus the maximum sales charge for Class A shares) | $10.78 |
| Advisor Class | |
| Net assets | $2,253,541 |
| Shares outstanding | 215,963 |
| Net asset value per share | $10.43 |
| Class C | |
| Net assets | $11,160,798 |
| Shares outstanding | 1,067,385 |
| Net asset value per share | $10.46 |
| Institutional Class | |
| Net assets | $343,275,709 |
| Shares outstanding | 32,885,684 |
| Net asset value per share | $10.44 |
| Institutional 2 Class | |
| Net assets | $10,662,209 |
| Shares outstanding | 1,024,366 |
| Net asset value per share | $10.41 |
| Institutional 3 Class | |
| Net assets | $3,231,153 |
| Shares outstanding | 309,709 |
| Net asset value per share | $10.43 |
The accompanying Notes to Financial Statements are an integral part of this
statement.
| 20 | Columbia California Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Statement of Operations
Year Ended April 30, 2019
Year Ended April 30, 2019
| Net investment income | |
| Income: | |
| Dividends — unaffiliated issuers | $47,927 |
| Interest | 13,518,743 |
| Total income | 13,566,670 |
| Expenses: | |
| Management services fees | 1,865,900 |
| Distribution and/or service fees | |
| Class A | 71,874 |
| Class C | 122,947 |
| Transfer agent fees | |
| Class A | 34,789 |
| Advisor Class | 2,403 |
| Class C | 14,862 |
| Institutional Class | 416,766 |
| Institutional 2 Class | 5,502 |
| Institutional 3 Class | 320 |
| Compensation of board members | 18,141 |
| Custodian fees | 3,899 |
| Printing and postage fees | 14,765 |
| Registration fees | 18,097 |
| Audit fees | 34,650 |
| Legal fees | 10,397 |
| Compensation of chief compliance officer | 85 |
| Other | 14,795 |
| Total expenses | 2,650,192 |
| Fees waived or expenses reimbursed by Investment Manager and its affiliates | (520,039) |
| Expense reduction | (40) |
| Total net expenses | 2,130,113 |
| Net investment income | 11,436,557 |
| Realized and unrealized gain (loss) — net | |
| Net realized gain (loss) on: | |
| Investments — unaffiliated issuers | 339,238 |
| Net realized gain | 339,238 |
| Net change in unrealized appreciation (depreciation) on: | |
| Investments — unaffiliated issuers | 8,178,888 |
| Net change in unrealized appreciation (depreciation) | 8,178,888 |
| Net realized and unrealized gain | 8,518,126 |
| Net increase in net assets resulting from operations | $19,954,683 |
The accompanying Notes to Financial Statements are an
integral part of this statement.
|
Columbia
California Intermediate Municipal Bond Fund | Annual Report 2019
|
21 |
Table of Contents
Statement of Changes in Net Assets
|
Year
Ended
April 30, 2019 |
Year
Ended
April 30, 2018 |
|
| Operations | ||
| Net investment income | $11,436,557 | $11,803,160 |
| Net realized gain | 339,238 | 306,351 |
| Net change in unrealized appreciation (depreciation) | 8,178,888 | (6,764,353) |
| Net increase in net assets resulting from operations | 19,954,683 | 5,345,158 |
| Distributions to shareholders | ||
| Net investment income and net realized gains | ||
| Class A | (766,498) | |
| Advisor Class | (57,996) | |
| Class C | (235,470) | |
| Institutional Class | (10,042,410) | |
| Institutional 2 Class | (269,809) | |
| Institutional 3 Class | (64,374) | |
| Net investment income | ||
| Class A | (768,273) | |
| Advisor Class | (36,558) | |
| Class B | (48) | |
| Class C | (255,849) | |
| Institutional Class | (10,485,055) | |
| Institutional 2 Class | (177,401) | |
| Institutional 3 Class | (15,152) | |
| Total distributions to shareholders (Note 2) | (11,436,557) | (11,738,336) |
| Decrease in net assets from capital stock activity | (22,401,162) | (839,608) |
| Total decrease in net assets | (13,883,036) | (7,232,786) |
| Net assets at beginning of year | 416,464,218 | 423,697,004 |
| Net assets at end of year | $402,581,182 | $416,464,218 |
| Excess of distributions over net investment income | $(51,885) | $(51,885) |
The accompanying Notes to Financial Statements are an
integral part of this statement.
| 22 | Columbia California Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Statement of Changes in Net Assets
(continued)
| Year Ended | Year Ended | |||
| April 30, 2019 | April 30, 2018 | |||
| Shares | Dollars ($) | Shares | Dollars ($) | |
| Capital stock activity | ||||
| Class A | ||||
| Subscriptions | 1,221,766 | 12,574,432 | 568,644 | 5,932,350 |
| Distributions reinvested | 66,432 | 684,127 | 63,662 | 663,365 |
| Redemptions | (902,313) | (9,277,531) | (971,417) | (10,117,936) |
| Net increase (decrease) | 385,885 | 3,981,028 | (339,111) | (3,522,221) |
| Advisor Class | ||||
| Subscriptions | 95,131 | 974,459 | 131,476 | 1,369,845 |
| Distributions reinvested | 5,598 | 57,516 | 3,502 | 36,274 |
| Redemptions | (74,024) | (760,670) | (32,922) | (342,003) |
| Net increase | 26,705 | 271,305 | 102,056 | 1,064,116 |
| Class B | ||||
| Redemptions | — | — | (971) | (10,245) |
| Net decrease | — | — | (971) | (10,245) |
| Class C | ||||
| Subscriptions | 121,594 | 1,247,406 | 188,393 | 1,963,830 |
| Distributions reinvested | 17,202 | 176,928 | 18,690 | 194,585 |
| Redemptions | (392,556) | (4,036,023) | (379,798) | (3,963,125) |
| Net decrease | (253,760) | (2,611,689) | (172,715) | (1,804,710) |
| Institutional Class | ||||
| Subscriptions | 11,652,199 | 119,527,666 | 7,019,542 | 73,010,509 |
| Distributions reinvested | 227,694 | 2,339,160 | 203,148 | 2,109,952 |
| Redemptions | (14,798,720) | (151,356,387) | (7,240,569) | (75,190,123) |
| Net decrease | (2,918,827) | (29,489,561) | (17,879) | (69,662) |
| Institutional 2 Class | ||||
| Subscriptions | 962,491 | 9,856,030 | 324,509 | 3,368,093 |
| Distributions reinvested | 26,300 | 269,512 | 17,102 | 177,111 |
| Redemptions | (687,725) | (6,997,453) | (89,403) | (924,442) |
| Net increase | 301,066 | 3,128,089 | 252,208 | 2,620,762 |
| Institutional 3 Class | ||||
| Subscriptions | 355,216 | 3,652,149 | 86,753 | 911,412 |
| Distributions reinvested | 6,236 | 64,072 | 1,437 | 14,857 |
| Redemptions | (136,640) | (1,396,555) | (4,267) | (43,917) |
| Net increase | 224,812 | 2,319,666 | 83,923 | 882,352 |
| Total net decrease | (2,234,119) | (22,401,162) | (92,489) | (839,608) |
The accompanying Notes to Financial Statements are an integral part of this
statement.
|
Columbia
California Intermediate Municipal Bond Fund | Annual Report 2019
|
23 |
Table of Contents
Financial Highlights
The
following table is intended to help you understand the Fund’s financial performance. Certain information reflects financial results for a single share of a class held for the periods shown. Per share net investment income (loss) amounts are
calculated based on average shares outstanding during the period. Total return assumes reinvestment of all dividends and distributions, if any. Total return does not reflect payment of sales charges, if any. Total return and portfolio turnover are
not annualized for periods of less than one year. The portfolio turnover rate is calculated without regard to purchase and sales transactions of short-term instruments and certain derivatives, if any. If such transactions were included, the
Fund’s portfolio turnover rate may be higher.
|
Net
asset value,
beginning of period |
Net
investment income |
Net
realized and unrealized gain (loss) |
Total
from
investment operations |
Distributions
from net investment income |
Total
distributions to shareholders |
|
| Class A | ||||||
| Year Ended 4/30/2019 | $10.23 | 0.27 | 0.23 | 0.50 | (0.27) | (0.27) |
| Year Ended 4/30/2018 | $10.38 | 0.27 | (0.15) | 0.12 | (0.27) | (0.27) |
| Year Ended 4/30/2017 | $10.72 | 0.26 | (0.34) | (0.08) | (0.26) | (0.26) |
| Year Ended 4/30/2016 | $10.50 | 0.27 | 0.22 | 0.49 | (0.27) | (0.27) |
| Year Ended 4/30/2015 | $10.42 | 0.29 | 0.08 | 0.37 | (0.29) | (0.29) |
| Advisor Class | ||||||
| Year Ended 4/30/2019 | $10.20 | 0.30 | 0.23 | 0.53 | (0.30) | (0.30) |
| Year Ended 4/30/2018 | $10.36 | 0.29 | (0.16) | 0.13 | (0.29) | (0.29) |
| Year Ended 4/30/2017 | $10.69 | 0.29 | (0.33) | (0.04) | (0.29) | (0.29) |
| Year Ended 4/30/2016 | $10.46 | 0.29 | 0.24 | 0.53 | (0.30) | (0.30) |
| Year Ended 4/30/2015 | $10.39 | 0.32 | 0.07 | 0.39 | (0.32) | (0.32) |
| Class C | ||||||
| Year Ended 4/30/2019 | $10.22 | 0.20 | 0.24 | 0.44 | (0.20) | (0.20) |
| Year Ended 4/30/2018 | $10.38 | 0.19 | (0.16) | 0.03 | (0.19) | (0.19) |
| Year Ended 4/30/2017 | $10.72 | 0.18 | (0.34) | (0.16) | (0.18) | (0.18) |
| Year Ended 4/30/2016 | $10.49 | 0.19 | 0.23 | 0.42 | (0.19) | (0.19) |
| Year Ended 4/30/2015 | $10.42 | 0.21 | 0.07 | 0.28 | (0.21) | (0.21) |
| Institutional Class | ||||||
| Year Ended 4/30/2019 | $10.21 | 0.30 | 0.23 | 0.53 | (0.30) | (0.30) |
| Year Ended 4/30/2018 | $10.36 | 0.29 | (0.15) | 0.14 | (0.29) | (0.29) |
| Year Ended 4/30/2017 | $10.70 | 0.28 | (0.33) | (0.05) | (0.29) | (0.29) |
| Year Ended 4/30/2016 | $10.47 | 0.30 | 0.23 | 0.53 | (0.30) | (0.30) |
| Year Ended 4/30/2015 | $10.40 | 0.32 | 0.07 | 0.39 | (0.32) | (0.32) |
| Institutional 2 Class | ||||||
| Year Ended 4/30/2019 | $10.18 | 0.30 | 0.23 | 0.53 | (0.30) | (0.30) |
| Year Ended 4/30/2018 | $10.33 | 0.30 | (0.15) | 0.15 | (0.30) | (0.30) |
| Year Ended 4/30/2017 | $10.67 | 0.29 | (0.34) | (0.05) | (0.29) | (0.29) |
| Year Ended 4/30/2016 | $10.44 | 0.31 | 0.23 | 0.54 | (0.31) | (0.31) |
| Year Ended 4/30/2015 | $10.37 | 0.32 | 0.08 | 0.40 | (0.33) | (0.33) |
The accompanying Notes to Financial Statements are an
integral part of this statement.
| 24 | Columbia California Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Financial Highlights
(continued)
|
Net
asset value, end of period |
Total
return |
Total
gross
expense ratio to average net assets (a) |
Total
net
expense ratio to average net assets (a),(b) |
Net
investment
income ratio to average net assets |
Portfolio
turnover |
Net
assets, end of period (000’s) |
|
| Class A | |||||||
| Year Ended 4/30/2019 | $10.46 | 5.00% | 0.87% | 0.74% (c) | 2.67% | 17% | $31,998 |
| Year Ended 4/30/2018 | $10.23 | 1.10% | 0.88% | 0.74% (c) | 2.56% | 5% | $27,341 |
| Year Ended 4/30/2017 | $10.38 | (0.75%) | 0.92% | 0.74% (c) | 2.45% | 17% | $31,273 |
| Year Ended 4/30/2016 | $10.72 | 4.76% | 0.94% | 0.74% (c) | 2.58% | 8% | $51,869 |
| Year Ended 4/30/2015 | $10.50 | 3.60% | 0.95% | 0.74% (c) | 2.76% | 6% | $47,317 |
| Advisor Class | |||||||
| Year Ended 4/30/2019 | $10.43 | 5.28% | 0.62% | 0.49% (c) | 2.92% | 17% | $2,254 |
| Year Ended 4/30/2018 | $10.20 | 1.25% | 0.63% | 0.49% (c) | 2.83% | 5% | $1,931 |
| Year Ended 4/30/2017 | $10.36 | (0.42%) | 0.67% | 0.49% (c) | 2.71% | 17% | $903 |
| Year Ended 4/30/2016 | $10.69 | 5.13% | 0.69% | 0.49% (c) | 2.81% | 8% | $1,457 |
| Year Ended 4/30/2015 | $10.46 | 3.76% | 0.70% | 0.49% (c) | 3.02% | 6% | $529 |
| Class C | |||||||
| Year Ended 4/30/2019 | $10.46 | 4.32% | 1.62% | 1.49% (c) | 1.92% | 17% | $11,161 |
| Year Ended 4/30/2018 | $10.22 | 0.25% | 1.63% | 1.49% (c) | 1.81% | 5% | $13,508 |
| Year Ended 4/30/2017 | $10.38 | (1.49%) | 1.67% | 1.49% (c) | 1.71% | 17% | $15,503 |
| Year Ended 4/30/2016 | $10.72 | 4.08% | 1.69% | 1.49% (c) | 1.83% | 8% | $14,549 |
| Year Ended 4/30/2015 | $10.49 | 2.72% | 1.70% | 1.49% (c) | 2.01% | 6% | $12,965 |
| Institutional Class | |||||||
| Year Ended 4/30/2019 | $10.44 | 5.27% | 0.62% | 0.49% (c) | 2.92% | 17% | $343,276 |
| Year Ended 4/30/2018 | $10.21 | 1.35% | 0.63% | 0.49% (c) | 2.82% | 5% | $365,455 |
| Year Ended 4/30/2017 | $10.36 | (0.51%) | 0.67% | 0.49% (c) | 2.71% | 17% | $371,130 |
| Year Ended 4/30/2016 | $10.70 | 5.12% | 0.69% | 0.49% (c) | 2.83% | 8% | $378,630 |
| Year Ended 4/30/2015 | $10.47 | 3.76% | 0.70% | 0.49% (c) | 3.02% | 6% | $329,535 |
| Institutional 2 Class | |||||||
| Year Ended 4/30/2019 | $10.41 | 5.34% | 0.56% | 0.43% | 2.98% | 17% | $10,662 |
| Year Ended 4/30/2018 | $10.18 | 1.42% | 0.56% | 0.42% | 2.89% | 5% | $7,363 |
| Year Ended 4/30/2017 | $10.33 | (0.42%) | 0.55% | 0.41% | 2.80% | 17% | $4,867 |
| Year Ended 4/30/2016 | $10.67 | 5.23% | 0.55% | 0.39% | 2.93% | 8% | $2,829 |
| Year Ended 4/30/2015 | $10.44 | 3.85% | 0.55% | 0.40% | 3.09% | 6% | $1,738 |
The accompanying Notes to Financial Statements are an
integral part of this statement.
|
Columbia
California Intermediate Municipal Bond Fund | Annual Report 2019
|
25 |
Table of Contents
Financial Highlights
(continued)
|
Net
asset value,
beginning of period |
Net
investment income |
Net
realized and unrealized gain (loss) |
Total
from
investment operations |
Distributions
from net investment income |
Total
distributions to shareholders |
|
| Institutional 3 Class | ||||||
| Year Ended 4/30/2019 | $10.20 | 0.31 | 0.23 | 0.54 | (0.31) | (0.31) |
| Year Ended 4/30/2018 | $10.35 | 0.30 | (0.15) | 0.15 | (0.30) | (0.30) |
| Year Ended 4/30/2017 (d) | $10.27 | 0.05 | 0.08 | 0.13 | (0.05) | (0.05) |
| Notes to Financial Highlights | |
| (a) | In addition to the fees and expenses that the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of any other funds in which it invests. Such indirect expenses are not included in the Fund’s reported expense ratios. |
| (b) | Total net expenses include the impact of certain fee waivers/expense reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
| (c) | The benefits derived from expense reductions had an impact of less than 0.01%. |
| (d) | Institutional 3 Class shares commenced operations on March 1, 2017. Per share data and total return reflect activity from that date. |
| (e) | Annualized. |
The accompanying Notes to Financial Statements are an
integral part of this statement.
| 26 | Columbia California Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Financial Highlights
(continued)
|
Net
asset value, end of period |
Total
return |
Total
gross
expense ratio to average net assets (a) |
Total
net
expense ratio to average net assets (a),(b) |
Net
investment
income ratio to average net assets |
Portfolio
turnover |
Net
assets, end of period (000’s) |
|
| Institutional 3 Class | |||||||
| Year Ended 4/30/2019 | $10.43 | 5.39% | 0.51% | 0.38% | 3.02% | 17% | $3,231 |
| Year Ended 4/30/2018 | $10.20 | 1.46% | 0.52% | 0.38% | 2.95% | 5% | $866 |
| Year Ended 4/30/2017 (d) | $10.35 | 1.27% | 0.52% (e) | 0.36% (e) | 2.98% (e) | 17% | $10 |
The accompanying Notes to Financial Statements are an integral part of this
statement.
|
Columbia
California Intermediate Municipal Bond Fund | Annual Report 2019
|
27 |
Table of Contents
Notes to Financial Statements
April 30, 2019
April 30, 2019
Note 1. Organization
Columbia California Intermediate Municipal Bond Fund
(formerly known as Columbia AMT-Free California Intermediate Muni Bond Fund) (the Fund), a series of Columbia Funds Series Trust (the Trust), is a diversified fund. The Trust is registered under the Investment Company Act of 1940, as amended (the
1940 Act), as an open-end management investment company organized as a Delaware statutory trust.
Effective May 14, 2019, Columbia AMT-Free California
Intermediate Muni Bond Fund was renamed Columbia California Intermediate Municipal Bond Fund.
Fund shares
The Trust may issue an unlimited number of shares (without par
value). Although all share classes generally have identical voting, dividend and liquidation rights, each share class votes separately when required by the Trust’s organizational documents or by law. Different share classes pay different
distribution amounts to the extent the expenses of such share classes differ, and distributions in liquidation will be proportional to the net asset value of each share class. Each share class has its own expense and sales charge structure. The Fund
offers each of the share classes identified below.
Class
A shares are subject to a maximum front-end sales charge of 3.00% based on the initial investment amount. Class A shares purchased without an initial sales charge are subject to a contingent deferred sales charge (CDSC) of 0.75% on certain
investments of $500,000 or more if redeemed within 12 months after purchase.
Advisor Class shares are not subject to sales charges and are
generally available only to omnibus retirement plans and certain investors as described in the Fund’s prospectus.
Class C shares are subject to a 1.00% CDSC on shares redeemed
within 12 months after purchase. Effective July 1, 2018, Class C shares automatically convert to Class A shares of the same Fund in the month of or the month following the 10-year anniversary of the Class C shares purchase date.
Institutional Class shares are not subject to sales charges
and are generally available only to eligible investors, which are subject to different investment minimums as described in the Fund’s prospectus.
Institutional 2 Class shares are not subject to sales charges
and are generally available only to investors purchasing through authorized investment professionals and omnibus retirement plans as described in the Fund’s prospectus.
Institutional 3 Class shares are not subject to sales charges
and are available to institutional and certain other investors as described in the Fund’s prospectus.
Note 2. Summary of significant accounting
policies
Basis of preparation
The Fund is an investment company that applies the accounting
and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946,
Financial Services - Investment Companies
(ASC 946). The financial statements are prepared
in accordance with U.S. generally accepted accounting principles (GAAP), which requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
The following is a summary of significant accounting policies
followed by the Fund in the preparation of its financial statements.
Security valuation
Debt securities generally are valued by pricing services
approved by the Board of Trustees based upon market transactions for normal, institutional-size trading units of similar securities. The services may use various pricing techniques that take into account, as applicable, factors such as yield,
quality, coupon rate, maturity, type of issue, trading characteristics and other data, as well as approved independent broker-dealer quotes. Debt securities for which quotations are not readily available or
| 28 | Columbia California Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Notes to Financial Statements
(continued)
April 30, 2019
April 30, 2019
not believed to be
reflective of market value may also be valued based upon a bid quote from an approved independent broker-dealer. Debt securities maturing in 60 days or less are valued primarily at amortized cost value, unless this method results in a valuation that
management believes does not approximate market value.
Investments in open-end investment companies, including money
market funds, are valued at their latest net asset value.
Investments for which market quotations are not readily
available, or that have quotations which management believes are not reflective of market value or reliable, are valued at fair value as determined in good faith under procedures approved by and under the general supervision of the Board of
Trustees. If a security or class of securities (such as foreign securities) is valued at fair value, such value is likely to be different from the quoted or published price for the security.
The determination of fair value often requires significant
judgment. To determine fair value, management may use assumptions including but not limited to future cash flows and estimated risk premiums. Multiple inputs from various sources may be used to determine fair value.
GAAP requires disclosure regarding the inputs and valuation
techniques used to measure fair value and any changes in valuation inputs or techniques. In addition, investments shall be disclosed by major category. This information is disclosed following the Fund’s Portfolio of Investments.
Delayed delivery securities
The Fund may trade securities on other than normal settlement
terms, including securities purchased or sold on a “when-issued” or "forward commitment" basis. This may increase risk to the Fund since the other party to the transaction may fail to deliver, which could cause the Fund to subsequently
invest at less advantageous prices. The Fund designates cash or liquid securities in an amount equal to the delayed delivery commitment.
Security transactions
Security transactions are accounted for on the trade date.
Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes.
Income recognition
Interest income is recorded on an accrual basis. Market
premiums and discounts, including original issue discounts, are amortized and accreted, respectively, over the expected life of the security on all debt securities, unless otherwise noted.
The Fund may place a debt security on non-accrual status and
reduce related interest income when it becomes probable that the interest will not be collected and the amount of uncollectible interest can be reasonably estimated. A defaulted debt security is removed from non-accrual status when the issuer
resumes interest payments or when collectibility of interest is reasonably assured.
Dividend income is recorded on the ex-dividend date.
Expenses
General expenses of the Trust are allocated to the Fund and
other funds of the Trust based upon relative net assets or other expense allocation methodologies determined by the nature of the expense. Expenses directly attributable to the Fund are charged to the Fund. Expenses directly attributable to a
specific class of shares are charged to that share class.
Determination of class net asset value
All income, expenses (other than class-specific expenses,
which are charged to that share class, as shown in the Statement of Operations) and realized and unrealized gains (losses) are allocated to each class of the Fund on a daily basis, based on the relative net assets of each class, for purposes of
determining the net asset value of each class.
|
Columbia
California Intermediate Municipal Bond Fund | Annual Report 2019
|
29 |
Table of Contents
Notes to Financial Statements
(continued)
April 30, 2019
April 30, 2019
Federal income tax status
The Fund intends to qualify each year as a regulated
investment company under Subchapter M of the Internal Revenue Code, as amended, and will distribute substantially all of its net tax-exempt and investment company taxable income and net capital gain, if any, for its tax year, and as such will not be
subject to federal income taxes. In addition, the Fund intends to distribute in each calendar year substantially all of its ordinary income, capital gain net income and certain other amounts, if any, such that the Fund should not be subject to
federal excise tax. Therefore, no federal income or excise tax provision is recorded.
Distributions to shareholders
Distributions from net investment income, if any, are declared
daily and paid monthly. Net realized capital gains, if any, are distributed at least annually. Income distributions and capital gain distributions are determined in accordance with federal income tax regulations, which may differ from GAAP.
Guarantees and indemnifications
Under the Trust’s organizational documents and, in some
cases, by contract, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust or its funds. In addition, certain of the Fund’s contracts with its service providers contain
general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown since the amount of any future claims that may be made against the Fund cannot be determined, and the Fund has no historical basis for predicting
the likelihood of any such claims.
Recent accounting
pronouncements
Accounting Standards Update 2017-08
Premium Amortization on Purchased Callable Debt Securities
In March 2017, the Financial Accounting Standards Board issued
Accounting Standards Update (ASU) No. 2017-08 Premium Amortization on Purchased Callable Debt Securities. ASU No. 2017-08 updates the accounting standards to shorten the amortization period for certain purchased callable debt securities, held at a
premium, to be amortized to the earliest call date. The update applies to securities with explicit, noncontingent call features that are callable at fixed prices and on preset dates. The standard is effective for annual periods beginning after
December 15, 2018 and interim periods within those fiscal years. Management does not expect the implementation of this guidance to have a material impact on the financial statement amounts and footnote disclosures.
Accounting Standards Update 2018-13 Disclosure Framework -
Changes to the Disclosure Requirements for Fair Value Measurement
In August 2018, the Financial Accounting Standards Board
issued Accounting Standards Update (ASU) No. 2018-13 Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. ASU No. 2018-13, in addition to other modifications and additions, removes the requirement to disclose the
amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy and the policy for the timing of transfers between levels. The standard is effective for annual periods beginning after December 15, 2019 and interim periods
within those fiscal years. At this time, management is evaluating the implication of this guidance and the impact it will have on the financial statement disclosures, if any.
Disclosure Update and Simplification
In September 2018, the Securities and Exchange Commission
(SEC) released Final Rule 33-10532, Disclosure Update and Simplification, which amends certain financial statement disclosure requirements that the SEC determined to be redundant, outdated, or superseded in light of other SEC disclosure
requirements, GAAP, or changes in the information environment. As a result of the amendments, management implemented disclosure changes which included removing the components of distributable earnings presented on the Statement of Assets and
Liabilities and combining income and gain distributions paid to shareholders as presented on the Statement of Changes in Net Assets. Any values presented to meet prior year requirements were left unchanged. The amendments had no effect on the
Fund’s net assets or results of operation.
| 30 | Columbia California Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Notes to Financial Statements
(continued)
April 30, 2019
April 30, 2019
Note 3. Fees and other transactions with
affiliates
Management services fees
The Fund has entered into a Management Agreement with Columbia
Management Investment Advisers, LLC (the Investment Manager), a wholly-owned subsidiary of Ameriprise Financial, Inc. (Ameriprise Financial). Under the Management Agreement, the Investment Manager provides the Fund with investment research and
advice, as well as administrative and accounting services. The management services fee is an annual fee that is equal to a percentage of the Fund’s daily net assets that declines from 0.47% to 0.31% as the Fund’s net assets increase. The
effective management services fee rate for the year ended April 30, 2019 was 0.47% of the Fund’s average daily net assets.
Compensation of board members
Members of the Board of Trustees who are not officers or
employees of the Investment Manager or Ameriprise Financial are compensated for their services to the Fund as disclosed in the Statement of Operations. Under a Deferred Compensation Plan (the Deferred Plan), these members of the Board of Trustees
may elect to defer payment of up to 100% of their compensation. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of certain funds managed by the Investment Manager. The Fund’s liability for these
amounts is adjusted for market value changes and remains in the Fund until distributed in accordance with the Deferred Plan. All amounts payable under the Deferred Plan constitute a general unsecured obligation of the Fund.
Compensation of Chief Compliance Officer
The Board of Trustees has appointed a Chief Compliance Officer
to the Fund in accordance with federal securities regulations. As disclosed in the Statement of Operations, a portion of the Chief Compliance Officer’s total compensation is allocated to the Fund, along with other allocations to affiliated
registered investment companies managed by the Investment Manager and its affiliates, based on relative net assets.
Transactions with affiliates
For the year ended April 30, 2019, the Fund engaged in
purchase and/or sale transactions with affiliates and/or accounts that have a common investment manager (or affiliated investment managers), common directors/trustees, and/or common officers. Those purchase and sale transactions complied with
provisions of Rule 17a-7 under the 1940 Act and were $2,370,861 and $0, respectively.
Transfer agency fees
Under a Transfer and Dividend Disbursing Agent Agreement,
Columbia Management Investment Services Corp. (the Transfer Agent), an affiliate of the Investment Manager and a wholly-owned subsidiary of Ameriprise Financial, is responsible for providing transfer agency services to the Fund. The Transfer Agent
has contracted with DST Asset Manager Solutions, Inc. (DST) to serve as sub-transfer agent. The Transfer Agent pays the fees of DST for services as sub-transfer agent and DST is not entitled to reimbursement for such fees from the Fund (with the
exception of out-of-pocket fees).
The Fund pays the
Transfer Agent a monthly transfer agency fee based on the number or the average value of accounts, depending on the type of account. In addition, the Fund pays the Transfer Agent a fee for shareholder services based on the number of accounts or on a
percentage of the average aggregate value of the Fund’s shares maintained in omnibus accounts up to the lesser of the amount charged by the financial intermediary or a cap established by the Board of Trustees from time to time.
The Transfer Agent also receives compensation from the Fund
for various shareholder services and reimbursements for certain out-of-pocket fees. Total transfer agency fees for Institutional 2 Class and Institutional 3 Class shares are subject to an annual limitation of not more than 0.07% and 0.02%,
respectively, of the average daily net assets attributable to each share class.
|
Columbia
California Intermediate Municipal Bond Fund | Annual Report 2019
|
31 |
Table of Contents
Notes to Financial Statements
(continued)
April 30, 2019
April 30, 2019
For
the year ended April 30, 2019, the Fund’s effective transfer agency fee rates as a percentage of average daily net assets of each class were as follows:
| Effective rate (%) | |
| Class A | 0.12 |
| Advisor Class | 0.12 |
| Class C | 0.12 |
| Institutional Class | 0.12 |
| Institutional 2 Class | 0.06 |
| Institutional 3 Class | 0.02 |
An annual minimum account balance
fee of $20 may apply to certain accounts with a value below the applicable share class’s initial minimum investment requirements to reduce the impact of small accounts on transfer agency fees. These minimum account balance fees are remitted to
the Fund and recorded as part of expense reductions in the Statement of Operations. For the year ended April 30, 2019, these minimum account balance fees reduced total expenses of the Fund by $40.
Distribution and service fees
The Fund has entered into an agreement with Columbia
Management Investment Distributors, Inc. (the Distributor), an affiliate of the Investment Manager and a wholly-owned subsidiary of Ameriprise Financial, for distribution and shareholder services. The Board of Trustees has approved, and the Fund has
adopted, distribution and shareholder service plans (the Plans) applicable to certain share classes, which set the distribution and service fees for the Fund. These fees are calculated daily and are intended to compensate the Distributor and/or
eligible selling and/or servicing agents for selling shares of the Fund and providing services to investors.
Under the Plans, the Fund pays a monthly combined distribution
and service fee to the Distributor at the maximum annual rate of 0.25% of the average daily net assets attributable to Class A shares of the Fund. Also under the Plans, the Fund pays a monthly service fee to the Distributor at the maximum annual
rate of 0.25% of the average daily net assets attributable to Class C shares of the Fund and a monthly distribution fee to the Distributor at the maximum annual rate of 0.75% of the average daily net assets attributable to Class C shares of the
Fund.
Sales charges (unaudited)
Sales charges, including front-end charges and CDSCs, received
by the Distributor for distributing Fund shares for the year ended April 30, 2019, if any, are listed below:
| Amount ($) | |
| Class A | 25,801 |
| Class C | 4,636 |
| 32 | Columbia California Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Notes to Financial Statements
(continued)
April 30, 2019
April 30, 2019
Expenses waived/reimbursed by the Investment Manager and its
affiliates
The Investment Manager and certain of its
affiliates have contractually agreed to waive fees and/or reimburse expenses (excluding certain fees and expenses described below) for the period(s) disclosed below, unless sooner terminated at the sole discretion of the Board of Trustees, so that
the Fund’s net operating expenses, after giving effect to fees waived/expenses reimbursed and any balance credits and/or overdraft charges from the Fund’s custodian, do not exceed the following annual rate(s) as a percentage of the
class’ average daily net assets:
Under the agreement governing
these fee waivers and/or expense reimbursement arrangements, the following fees and expenses are excluded from the waiver/reimbursement commitment, and therefore will be paid by the Fund, if applicable: taxes (including foreign transaction taxes),
expenses associated with investments in affiliated and non-affiliated pooled investment vehicles (including mutual funds and exchange-traded funds), transaction costs and brokerage commissions, costs related to any securities lending program,
dividend expenses associated with securities sold short, inverse floater program fees and expenses, transaction charges and interest on borrowed money, interest, infrequent and/or unusual expenses and any other expenses the exclusion of which is
specifically approved by the Board of Trustees. This agreement may be modified or amended only with approval from the Investment Manager, certain of its affiliates and the Fund. In addition to the contractual agreement, the Investment Manager and
certain of its affiliates have voluntarily agreed to waive fees and/or reimburse Fund expenses (excluding certain fees and expenses described above) so that Fund level expenses (expenses directly attributable to the Fund and not to a specific share
class) are waived proportionately across all share classes, but the Fund’s net operating expenses shall not exceed the contractual annual rates listed in the table above. This arrangement may be revised or discontinued at any time. Any fees
waived and/or expenses reimbursed under the expense reimbursement arrangements described above are not recoverable by the Investment Manager or its affiliates in future periods.
Note 4. Federal tax information
The timing and character of income and capital gain
distributions are determined in accordance with income tax regulations, which may differ from GAAP because of temporary or permanent book to tax differences.
At April 30, 2019, these differences were primarily due to
differing treatment for capital loss carryforwards, trustees’ deferred compensation and distributions. To the extent these differences were permanent, reclassifications were made among the components of the Fund’s net assets. Temporary
differences do not require reclassifications.
The Fund
did not have any permanent differences; therefore, no reclassifications were made.
The tax character of distributions paid during the years
indicated was as follows:
| Year Ended April 30, 2019 | Year Ended April 30, 2018 | ||||||
|
Ordinary
income ($) |
Tax-exempt
income ($) |
Long-term
capital gains ($) |
Total ($) |
Ordinary
income ($) |
Tax-exempt
income ($) |
Long-term
capital gains ($) |
Total ($) |
| 57,658 | 11,378,899 | — | 11,436,557 | 18,109 | 11,720,227 | — | 11,738,336 |
Short-term capital gain
distributions, if any, are considered ordinary income distributions for tax purposes.
|
Columbia
California Intermediate Municipal Bond Fund | Annual Report 2019
|
33 |
Table of Contents
Notes to Financial Statements
(continued)
April 30, 2019
April 30, 2019
At
April 30, 2019, the components of distributable earnings on a tax basis were as follows:
|
Undistributed
ordinary income ($) |
Undistributed
tax-
exempt income ($) |
Undistributed
long-term capital gains ($) |
Capital
loss
carryforwards ($) |
Net
unrealized
appreciation ($) |
| — | 943,223 | — | (4,406,469) | 19,595,161 |
At April 30, 2019, the cost of all
investments for federal income tax purposes along with the aggregate gross unrealized appreciation and depreciation based on that cost was:
|
Federal
tax cost ($) |
Gross
unrealized
appreciation ($) |
Gross
unrealized
(depreciation) ($) |
Net
unrealized
appreciation ($) |
| 390,258,907 | 19,643,210 | (48,049) | 19,595,161 |
Tax cost of investments and
unrealized appreciation/(depreciation) may also include timing differences that do not constitute adjustments to tax basis.
The following capital loss carryforwards, determined at April
30, 2019, may be available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code. Capital loss carryforwards with no expiration are required to be utilized prior
to any capital losses which carry an expiration date. As a result of this ordering rule, capital loss carryforwards which carry an expiration date may be more likely to expire unused. In addition, for the year ended April 30, 2019, capital loss
carryforwards utilized and expired unused, if any, were as follows:
|
No
expiration
short-term ($) |
No
expiration
long-term ($) |
Total ($) | Utilized ($) | Expired ($) |
| 4,406,469 | — | 4,406,469 | 339,238 | — |
Management of the Fund has
concluded that there are no significant uncertain tax positions in the Fund that would require recognition in the financial statements. However, management’s conclusion may be subject to review and adjustment at a later date based on factors
including, but not limited to, new tax laws, regulations, and administrative interpretations (including relevant court decisions). Generally, the Fund’s federal tax returns for the prior three fiscal years remain subject to examination by the
Internal Revenue Service.
Note 5. Portfolio
information
The cost of purchases and proceeds from
sales of securities, excluding short-term investments and derivatives, if any, aggregated to $66,544,016 and $85,259,646, respectively, for the year ended April 30, 2019. The amount of purchase and sale activity impacts the portfolio turnover rate
reported in the Financial Highlights.
Note
6. Interfund lending
Pursuant to an exemptive
order granted by the Securities and Exchange Commission, the Fund participates in a program (the Interfund Program) allowing each participating Columbia Fund (each, a Participating Fund) to lend money directly to and, except for closed-end funds and
money market funds, borrow money directly from other Participating Funds for temporary purposes. The amounts eligible for borrowing and lending under the Interfund Program are subject to certain restrictions.
Interfund loans are subject to the risk that the borrowing
fund could be unable to repay the loan when due, and a delay in repayment to the lending fund could result in lost opportunities and/or additional lending costs. The exemptive order is subject to conditions intended to mitigate conflicts of interest
arising from the Investment Manager’s relationship with each Participating Fund.
The Fund did not borrow or lend money under the Interfund
Program during the year ended April 30, 2019.
| 34 | Columbia California Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Notes to Financial Statements
(continued)
April 30, 2019
April 30, 2019
Note 7. Line of credit
The Fund has access to a revolving credit facility with a
syndicate of banks led by Citibank, N.A., HSBC Bank USA, N.A. and JPMorgan Chase Bank, N.A. whereby the Fund may borrow for the temporary funding of shareholder redemptions or for other temporary or emergency purposes. The credit facility, which is
a collective agreement between the Fund and certain other funds managed by the Investment Manager or an affiliated investment manager, severally and not jointly, permits collective borrowings up to $1 billion. Interest is charged to each
participating fund based on its borrowings at a rate equal to the higher of (i) the federal funds effective rate, (ii) the one-month LIBOR rate and (iii) the overnight bank funding rate, plus in each case, 1.00%. Each borrowing under the credit
facility matures no later than 60 days after the date of borrowing. The Fund also pays a commitment fee equal to its pro rata share of the unused amount of the credit facility at a rate of 0.15% per annum. The commitment fee is included in other
expenses in the Statement of Operations. This agreement expires annually in December unless extended or renewed.
The Fund had no borrowings during the year ended April 30,
2019.
Note 8. Significant risks
Credit risk
Credit risk is the risk that the value of debt securities in
the Fund’s portfolio may decline because the issuer may default and fail to pay interest or repay principal when due. Rating agencies assign credit ratings to debt securities to indicate their credit risk. Lower rated or unrated debt
securities held by the Fund may present increased credit risk as compared to higher-rated debt securities.
Geographic concentration risk
Because the Fund invests substantially in municipal securities
issued by the state identified in the Fund’s name and political sub-divisions of that state, the Fund will be particularly affected by adverse tax, legislative, regulatory, demographic or political changes as well as changes impacting the
state’s financial, economic or other condition and prospects. In addition, because of the relatively small number of issuers of tax-exempt securities in the state, the Fund may invest a higher percentage of assets in a single issuer and,
therefore, be more exposed to the risk of loss than a fund that invests more broadly. The value of municipal and other securities owned by the Fund also may be adversely affected by future changes in federal or state income tax laws.
Interest rate risk
Interest rate risk is the risk of losses attributable to
changes in interest rates. In general, if prevailing interest rates rise, the values of debt securities tend to fall, and if interest rates fall, the values of debt securities tend to rise. Actions by governments and central banking authorities can
result in increases in interest rates. Increasing interest rates may negatively affect the value of debt securities held by the Fund, resulting in a negative impact on the Fund’s performance and net asset value per share. In general, the
longer the maturity or duration of a debt security, the greater its sensitivity to changes in interest rates.
Liquidity risk
Liquidity risk is the risk associated with a lack of
marketability of investments which may make it difficult to sell the investment at a desirable time or price. Changing regulatory, market or other conditions or environments (for example, the interest rate or credit environments) may adversely
affect the liquidity of the Fund’s investments. The Fund may have to accept a lower selling price for the holding, sell other investments, or forego another, more appealing investment opportunity. Generally, the less liquid the market at the
time the Fund sells a portfolio investment, the greater the risk of loss or decline of value to the Fund. A less liquid market can lead to an increase in Fund redemptions, which may negatively impact Fund performance and net asset value per share,
including, for example, if the Fund is forced to sell securities in a down market.
|
Columbia
California Intermediate Municipal Bond Fund | Annual Report 2019
|
35 |
Table of Contents
Notes to Financial Statements
(continued)
April 30, 2019
April 30, 2019
Shareholder concentration risk
At April 30, 2019, one unaffiliated shareholder of record
owned 65.9% of the outstanding shares of the Fund in one or more accounts. The Fund has no knowledge about whether any portion of those shares was owned beneficially. Subscription and redemption activity by concentrated accounts may have a
significant effect on the operations of the Fund. In the case of a large redemption, the Fund may be forced to sell investments at inopportune times, including its liquid positions, which may result in Fund losses and the Fund holding a higher
percentage of less liquid positions. Large redemptions could result in decreased economies of scale and increased operating expenses for non-redeeming Fund shareholders.
Note 9. Subsequent events
Management has evaluated the events and transactions that
have occurred through the date the financial statements were issued and noted no items requiring adjustment of the financial statements or additional disclosure.
Note 10. Information regarding pending and settled
legal proceedings
Ameriprise Financial and certain of
its affiliates have historically been involved in a number of legal, arbitration and regulatory proceedings, including routine litigation, class actions, and governmental actions, concerning matters arising in connection with the conduct of their
business activities. Ameriprise Financial believes that the Fund is not currently the subject of, and that neither Ameriprise Financial nor any of its affiliates are the subject of, any pending legal, arbitration or regulatory proceedings that are
likely to have a material adverse effect on the Fund or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Fund. Ameriprise Financial is required to make quarterly (10-Q), annual (10-K) and, as necessary,
8-K filings with the Securities and Exchange Commission (SEC) on legal and regulatory matters that relate to Ameriprise Financial and its affiliates. Copies of these filings may be obtained by accessing the SEC website at www.sec.gov.
There can be no assurance that these matters, or the adverse
publicity associated with them, will not result in increased Fund redemptions, reduced sale of Fund shares or other adverse consequences to the Fund. Further, although we believe proceedings are not likely to have a material adverse effect on the
Fund or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Fund, these proceedings are subject to uncertainties and, as such, we are unable to estimate the possible loss or range of loss that may result.
An adverse outcome in one or more of these proceedings could result in adverse judgments, settlements, fines, penalties or other relief that could have a material adverse effect on the consolidated financial condition or results of operations of
Ameriprise Financial.
| 36 | Columbia California Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Report of Independent Registered Public Accounting Firm
To the
Board of Trustees of Columbia Funds Series Trust and Shareholders of Columbia California Intermediate Municipal Bond Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and
liabilities, including the portfolio of investments, of Columbia California Intermediate Municipal Bond Fund (formerly known as Columbia AMT-Free California Intermediate Muni Bond Fund) (one of the funds constituting Columbia Funds Series Trust,
referred to hereafter as the "Fund") as of April 30, 2019, the related statement of operations for the year ended April 30, 2019, the statement of changes in net assets for each of the two years in the period ended April 30, 2019, including the
related notes, and the financial highlights for each of the periods indicated therein (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the
financial position of the Fund as of April 30, 2019, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended April 30, 2019 and the financial highlights for each of the
periods indicated therein in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the
Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB)
and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in
accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks
of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation
of securities owned as of April 30, 2019 by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our
opinion.
/s/PricewaterhouseCoopers LLP
Minneapolis, Minnesota
June 21, 2019
We have served as the auditor of one or more investment
companies within the Columbia Funds Complex since 1977.
|
Columbia
California Intermediate Municipal Bond Fund | Annual Report 2019
|
37 |
Table of Contents
Federal Income Tax Information
(Unaudited)
(Unaudited)
The Fund hereby designates the following tax attributes for
the fiscal year ended April 30, 2019. Shareholders will be notified in early 2020 of the amounts for use in preparing 2019 income tax returns.
|
Exempt-
interest dividends |
|
| 99.50% |
Exempt-interest dividends. The percentage of net investment
income distributed during the fiscal year that qualifies as exempt-interest dividends for federal income tax purposes.
| 38 | Columbia California Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
TRUSTEES AND OFFICERS
The
Board oversees the Fund’s operations and appoints officers who are responsible for day-to-day business decisions based on policies set by the Board. The following table provides basic biographical information about the Fund’s Trustees as
of the printing of this report, including their principal occupations during the past five years, although specific titles for individuals may have varied over the period. Under current Board policy, Trustees not affiliated with the Investment
Manager generally may serve through the end of the calendar year in which they reach the mandatory retirement age established by the Board.
Independent trustees
|
Name,
address, year of birth |
Position
held
with the Trust and length of service |
Principal
occupation(s)
during past five years and other relevant professional experience |
Number
of
Funds in the Columbia Funds complex overseen |
Other
directorships
held by Trustee during the past five years |
|
George
S. Batejan
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1953 |
Trustee since 1/17 | Executive Vice President, Global Head of Technology and Operations, Janus Capital Group, Inc., 2010-2016 | 119 | Former Chairman of the Board, NICSA (National Investment Company Services Association) (Executive Committee, Nominating Committee and Governance Committee), 2014-2016; former Director, Intech Investment Management, 2011-2016; former Board Member, Metro Denver Chamber of Commerce, 2015-2016; former Advisory Board Member, University of Colorado Business School, 2015-2018 |
|
Kathleen
Blatz
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1954 |
Trustee since 1/06 for RiverSource Funds and since 6/11 for Nations Funds | Attorney; specializing in arbitration and mediation; Chief Justice, Minnesota Supreme Court, 1998-2006; Associate Justice, Minnesota Supreme Court, 1996-1998; Fourth Judicial District Court Judge, Hennepin County, 1994-1996; Attorney in private practice and public service, 1984-1993; State Representative, Minnesota House of Representatives, 1979-1993, which included service on the Tax and Financial Institutions and Insurance Committees; Member and Interim Chair, Minnesota Sports Facilities Authority, January 2017-July 2017; Interim President and Chief Executive Officer, Blue Cross and Blue Shield of Minnesota (health care insurance), February-July 2018 | 119 | Trustee, BlueCross BlueShield of Minnesota since 2009 (Chair of the Business Development Committee, 2014-2017; Chair of the Governance Committee since 2017); Chair of the Robina Foundation since August 2013; former Member and Chair of the Board, Minnesota Sports Facilities Authority, January 2017-July 2017 |
|
Edward
J. Boudreau, Jr.
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1944 |
Chair of the Board since 1/18; Trustee since 6/11 for RiverSource Funds and since 1/05 for Nations Funds | Managing Director, E.J. Boudreau & Associates (consulting) since 2000; FINRA Industry Arbitrator, 2002-present; Chairman and Chief Executive Officer, John Hancock Investments (asset management), Chairman and Interested Trustee for open-end and closed-end funds offered by John Hancock, 1989-2000; John Hancock Mutual Life Insurance Company, including Senior Vice President and Treasurer and Senior Vice President Information Technology, 1968-1988 | 119 | Former Trustee, Boston Museum of Science (Chair of Finance Committee) 1985-2013; former Trustee, BofA Funds Series Trust (11 funds), 2005-2011 |
|
Columbia
California Intermediate Municipal Bond Fund | Annual Report 2019
|
39 |
Table of Contents
TRUSTEES AND OFFICERS
(continued)
Independent trustees
(continued)
|
Name,
address, year of birth |
Position
held
with the Trust and length of service |
Principal
occupation(s)
during past five years and other relevant professional experience |
Number
of
Funds in the Columbia Funds complex overseen |
Other
directorships
held by Trustee during the past five years |
|
Pamela
G. Carlton
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1954 |
Trustee since 7/07 for RiverSource Funds and since 6/11 for Nations Funds | President, Springboard — Partners in Cross Cultural Leadership (consulting company) since 2003; Managing Director of US Equity Research, JP Morgan Chase, 1999-2003; Director of US Equity Research, Chase Asset Management, 1996-1999; Co-Director Latin America Research, 1993-1996, COO Global Research, 1992-1996, Co-Director of US Research, 1991-1992, Investment Banker, Morgan Stanley, 1982-1991 | 119 | Trustee, New York Presbyterian Hospital Board (Executive Committee and Chair of Human Resources Committee) since 1996; Director, Laurel Road Bank (Audit Committee) since 2017 |
|
Patricia
M. Flynn
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1950 |
Trustee since 11/04 for RiverSource Funds and since 6/11 for Nations Funds | Trustee Professor of Economics and Management, Bentley University since 1976 (also teaches and conducts research on corporate governance); Dean, McCallum Graduate School of Business, Bentley University, 1992-2002 | 119 | Trustee, MA Taxpayers Foundation since 1997; Board of Directors, The MA Business Roundtable since 2003; Board of Governors, Innovation Institute, MA Technology Collaborative since 2010 |
|
Brian
J. Gallagher
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1954 |
Trustee since 12/17 | Retired; Partner with Deloitte & Touche LLP and its predecessors, 1977-2016 | 117 | Trustee, Catholic Schools Foundation since 2004 |
|
Catherine
James Paglia
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1952 |
Trustee since 11/04 for RiverSource Funds and since 6/11 for Nations Funds | Director, Enterprise Asset Management, Inc. (private real estate and asset management company) since September 1998; Managing Director and Partner, Interlaken Capital, Inc., 1989-1997; Managing Director, Morgan Stanley, 1982-1989; Vice President, Investment Banking, 1980-1982, Associate, Investment Banking, 1976-1980, Dean Witter Reynolds, Inc. | 119 | Director, Valmont Industries, Inc. (irrigation systems manufacturer) since 2012; Trustee, Carleton College (on the Investment Committee); Trustee, Carnegie Endowment for International Peace (on the Investment Committee) |
|
Anthony
M. Santomero
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1946 |
Trustee since 6/11 for RiverSource Funds and since 1/08 for Nations Funds | Richard K. Mellon Professor Emeritus of Finance, The Wharton School, University of Pennsylvania, since 2002; Senior Advisor, McKinsey & Company (consulting), 2006-2008; President, Federal Reserve Bank of Philadelphia, 2000- 2006; Professor of Finance, The Wharton School, University of Pennsylvania, 1972-2002 | 119 | Trustee, Penn Mutual Life Insurance Company since March 2008; Director, Renaissance Reinsurance Ltd. since May 2008; former Trustee, BofA Funds Series Trust (11 funds), 2008-2011; former Director, Citigroup Inc. and Citibank, N.A., 2009-2019 |
| 40 | Columbia California Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
TRUSTEES AND OFFICERS
(continued)
Independent trustees
(continued)
|
Name,
address, year of birth |
Position
held
with the Trust and length of service |
Principal
occupation(s)
during past five years and other relevant professional experience |
Number
of
Funds in the Columbia Funds complex overseen |
Other
directorships
held by Trustee during the past five years |
|
Minor
M. Shaw
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1947 |
Trustee since 6/11 for RiverSource Funds and since 2003 for Nations Funds | President, Micco LLC (private investments) since 2011; President, Micco Corp. (family investment business), 1998-2011 | 119 | Director, BlueCross BlueShield of South Carolina since April 2008; Board Chair, Hollingsworth Funds since 2016; Advisory Board member, Duke Energy Corp. since October 2016; Chair of the Duke Endowment; Chair of Greenville – Spartanburg Airport Commission; former Trustee, BofA Funds Series Trust (11 funds), 2003-2011; former Director, Piedmont Natural Gas, 2004-2016; former Director, National Association of Corporate Directors, Carolinas Chapter, 2013-2018 |
|
Sandra
Yeager
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1964 |
Trustee since 12/17 | Retired; President and founder, Hanoverian Capital, LLC (SEC registered investment advisor firm), 2008-2016; Managing Director, DuPont Capital, 2006-2008; Managing Director, Morgan Stanley Investment Management, 2004-2006; Senior Vice President, Alliance Bernstein, 1990-2004 | 117 | Director, NAPE Education Foundation since October 2016 |
Interested trustee affiliated with Investment
Manager*
|
Name,
address, year of birth |
Position held with the Trust and length of service |
Principal
occupation(s) during the
past five years and other relevant professional experience |
Number
of
Funds in the Columbia Funds complex overseen |
Other
directorships
held by Trustee during the past five years |
|
William
F. Truscott
c/o Columbia Management Investment Advisers, LLC 225 Franklin St. Boston, MA 02110 1960 |
Trustee since 11/01 for RiverSource Funds and since 6/11 for Nations Funds; Senior Vice President since 2002 for RiverSource Funds and since 5/10 for Nations Funds | Chairman of the Board and President, Columbia Management Investment Advisers, LLC since May 2010 and February 2012, respectively; Chief Executive Officer, Global Asset Management, Ameriprise Financial, Inc. since September 2012 (previously Chief Executive Officer, U.S. Asset Management & President, Annuities, May 2010 - September 2012); Director and Chief Executive Officer, Columbia Management Investment Distributors, Inc. since May 2010 and February 2012, respectively; Chairman of the Board and Chief Executive Officer, RiverSource Distributors, Inc. since 2006; Director, Threadneedle Asset Management Holdings, SARL since 2014; President and Chief Executive Officer, Ameriprise Certificate Company, 2006 - August 2012. | 188 | Chairman of the Board, Columbia Management Investment Advisers, LLC since May 2010; Director, Columbia Management Investment Distributors, Inc. since May 2010; former Director, Ameriprise Certificate Company, 2006-January 2013 |
| * | Interested person (as defined under the 1940 Act) by reason of being an officer, director, security holder and/or employee of the Investment Manager or Ameriprise Financial. |
|
Columbia
California Intermediate Municipal Bond Fund | Annual Report 2019
|
41 |
Table of Contents
TRUSTEES AND OFFICERS
(continued)
Nations Funds refer to the Funds within the Columbia Funds
Complex that historically bore the Nations brand and includes series of Columbia Funds Series Trust. RiverSource Funds refer to the Funds within the Columbia Funds Complex that historically bore the RiverSource brand and includes series of Columbia
Funds Series Trust II.
The Statement of Additional
Information has additional information about the Fund’s Board members and is available, without charge, upon request by calling 800.345.6611, visiting columbiathreadneedleus.com/investor/ or contacting your financial intermediary.
| 42 | Columbia California Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
TRUSTEES AND OFFICERS
(continued)
The Board has appointed officers who are responsible for
day-to-day business decisions based on policies it has established. The officers serve at the pleasure of the Board. The following table provides basic information about the Officers of the Fund as of the printing of this report, including principal
occupations during the past five years, although their specific titles may have varied over the period. In addition to Mr. Truscott, who is Senior Vice President, the Fund’s other officers are:
Fund officers
|
Name,
address and year of birth |
Position
and year
first appointed to position for any Fund in the Columbia Funds complex or a predecessor thereof |
Principal occupation(s) during past five years |
|
Christopher
O. Petersen
5228 Ameriprise Financial Center Minneapolis, MN 55474 Born 1970 |
President and Principal Executive Officer (2015) | Vice President and Lead Chief Counsel, Ameriprise Financial, Inc. since January 2015 (previously Vice President and Chief Counsel, January 2010 - December 2014; officer of Columbia Funds and affiliated funds since 2007. |
|
Michael
G. Clarke
225 Franklin Street Boston, MA 02110 Born 1969 |
Chief Financial Officer (Principal Financial Officer) (2009) and Senior Vice President (2019) | Vice President, Head of North American Operations, and Co-Head of Global Operations, Columbia Management Investment Advisers, LLC, since June 2019 (previously Vice President – Accounting and Tax, May 2010 - May 2019); senior officer of Columbia Funds and affiliated funds since 2002 (previously Treasurer and Chief Accounting Officer, January 2009 - January 2019 and December 2015 - January 2019, respectively). |
|
Joseph
Beranek
5890 Ameriprise Financial Center Minneapolis, MN 55474 Born 1965 |
Treasurer and Chief Accounting Officer (Principal Accounting Officer) (2019) | Vice President — Mutual Fund Accounting and Financial Reporting, Columbia Management Investment Advisers, LLC, since December 2018 and March 2017, respectively (previously Vice President — Pricing and Corporate Actions, May 2010 - March 2017). |
|
Paul
B. Goucher
485 Lexington Avenue New York, NY 10017 Born 1968 |
Senior Vice President (2011) and Assistant Secretary (2008) | Senior Vice President and Assistant General Counsel, Ameriprise Financial, Inc. since January 2017 (previously Vice President and Lead Chief Counsel, November 2008 - January 2017 and January 2013 - January 2017, respectively); Vice President, Chief Legal Officer and Assistant Secretary, Columbia Management Investment Advisers, LLC since March 2015 (previously Vice President and Assistant Secretary, May 2010 – March 2015). |
|
Thomas
P. McGuire
225 Franklin Street Boston, MA 02110 Born 1972 |
Senior Vice President and Chief Compliance Officer (2012) | Vice President — Asset Management Compliance, Ameriprise Financial, Inc., since May 2010; Chief Compliance Officer, Ameriprise Certificate Company since September 2010. |
|
Colin
Moore
225 Franklin Street Boston, MA 02110 Born 1958 |
Senior Vice President (2010) | Executive Vice President and Global Chief Investment Officer, Ameriprise Financial, Inc., since July 2013; Executive Vice President and Global Chief Investment Officer, Columbia Management Investment Advisers, LLC since July 2013. |
|
Ryan
C. Larrenaga
225 Franklin Street Boston, MA 02110 Born 1970 |
Senior Vice President (2017), Chief Legal Officer (2017), and Secretary (2015) | Vice President and Chief Counsel, Ameriprise Financial, Inc. since August 2018 (previously Vice President and Group Counsel, August 2011 - August 2018); officer of Columbia Funds and affiliated funds since 2005. |
|
Michael
E. DeFao
225 Franklin Street Boston, MA 02110 Born 1968 |
Vice President (2011) and Assistant Secretary (2010) | Vice President and Chief Counsel, Ameriprise Financial, Inc. since May 2010. |
|
Lyn
Kephart-Strong
5228 Ameriprise Financial Center Minneapolis, MN 55474 Born 1960 |
Vice President (2015) | President, Columbia Management Investment Services Corp. since October 2014; Vice President & Resolution Officer, Ameriprise Trust Company since August 2009. |
|
Columbia
California Intermediate Municipal Bond Fund | Annual Report 2019
|
43 |
Table of Contents
Additional information
The
Fund mails one shareholder report to each shareholder address, unless such shareholder elected to receive shareholder reports from the Fund electronically. If you would like more than one report, please call shareholder services at 800.345.6611 and
additional reports will be sent to you.
Proxy voting
policies and procedures
The policy of the Board of
Trustees is to vote the proxies of the companies in which the Fund holds investments consistent with the procedures as stated in the Statement of Additional Information (SAI). You may obtain a copy of the SAI without charge by calling 800.345.6611;
contacting your financial intermediary; visiting columbiathreadneedleus.com/investor/; or searching the website of the Securities and Exchange Commission (SEC) at sec.gov. Information regarding how the Fund voted proxies relating to portfolio
securities is filed with the SEC by August 31st for the most recent 12-month period ending June 30th of that year, and is available without charge by visiting columbiathreadneedleus.com/investor/, or searching the website of the SEC at
sec.gov.
Quarterly schedule of investments
The Fund files a complete schedule of portfolio holdings
with the SEC for the first and third quarters of each fiscal year on Form N-Q or Form N-PORT (available for filings after March 31, 2019). The Fund’s Form N-Q or Form N-PORT is available on the SEC’s website at sec.gov. The Fund’s
complete schedule of portfolio holdings, as filed on Form N-Q or Form N-PORT, can also be obtained without charge, upon request, by calling 800.345.6611.
Additional Fund information
For more information about the Fund, please visit
columbiathreadneedleus.com/investor/ or call 800.345.6611. Customer Service Representatives are available to answer your questions Monday through Friday from 8 a.m. to 7 p.m. Eastern time.
Fund investment manager
Columbia Management Investment Advisers, LLC
225 Franklin Street
Boston, MA 02110
Fund distributor
Columbia Management Investment Distributors, Inc.
225 Franklin Street
Boston, MA 02110
Fund transfer agent
Columbia Management Investment Services Corp.
P.O. Box 219104
Kansas City, MO 64121-9104
| 44 | Columbia California Intermediate Municipal Bond Fund | Annual Report 2019 |
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Columbia California Intermediate Municipal Bond Fund
P.O. Box 219104
Kansas City, MO 64121-9104
Please read and consider the investment objectives, risks,
charges and expenses for any fund carefully before investing. For a prospectus and summary prospectus, which contains this and other important information about the Fund, go to
columbiathreadneedleus.com/investor/ . The Fund is distributed by Columbia Management Investment Distributors, Inc., member FINRA, and managed by Columbia Management Investment Advisers, LLC.
columbiathreadneedleus.com/investor/ . The Fund is distributed by Columbia Management Investment Distributors, Inc., member FINRA, and managed by Columbia Management Investment Advisers, LLC.
Columbia Threadneedle Investments (Columbia Threadneedle) is
the global brand name of the Columbia and Threadneedle group of companies. All rights reserved.
© 2019 Columbia Management Investment Advisers, LLC.
columbiathreadneedleus.com/investor/
ANN122_04_J01_(06/19)
Table of Contents
Annual
Report
April 30, 2019
April 30, 2019
Columbia Short Term Municipal Bond Fund
Beginning on January 1, 2021, as permitted by regulations
adopted by the Securities and Exchange Commission, paper copies of the Fund’s annual and semiannual shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the
reports will be made available on the Fund’s website (columbiathreadneedleus.com/investor/), and each time a report is posted you will be notified by mail and provided with a website address to access the report.
If you have already elected to receive shareholder reports
electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically at any time by contacting your financial intermediary (such
as a broker-dealer or bank) or, for Fund shares held directly with the Fund, by calling 800.345.6611 or by enrolling in “eDelivery” by logging into your account at columbiathreadneedleus.com/investor/.
You may elect to receive all future reports in paper free of
charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue receiving paper copies of your shareholder reports. If you invest directly with the Fund, you can call 800.345.6611 to
let the Fund know you wish to continue receiving paper copies of your shareholder reports. Your election to receive paper reports will apply to all Columbia Funds held in your account if you invest through a financial intermediary or all Columbia
Funds held with the fund complex if you invest directly with the Fund.
Not FDIC Insured • No bank guarantee • May lose
value
Table of Contents
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Columbia Short Term Municipal Bond Fund | Annual Report
2019
Table of Contents
Fund at a Glance
Investment objective
Columbia Short Term Municipal Bond
Fund (the Fund) seeks current income exempt from federal income tax, consistent with minimal fluctuation of principal.
Portfolio
management
Catherine
Stienstra
Co-Portfolio
Manager
Managed Fund
since 2012
Anders Myhran,
CFA
Co-Portfolio
Manager
Managed Fund
since 2015
Returns for Class A shares are shown
with and without the maximum initial sales charge of 1.00%. Returns for Class C shares are shown with and without the 1.00% contingent deferred sales charge for the first year only. The Fund’s other share classes are not subject to sales
charges and have limited eligibility. Please see the Fund’s prospectus for details. Performance for different share classes will vary based on differences in sales charges and fees associated with each share class. All results shown assume
reinvestment of distributions during the period. Returns do not reflect the deduction of taxes that a shareholder may pay on Fund distributions or on the redemption of Fund shares. Performance results reflect the effect of any fee waivers or
reimbursements of Fund expenses by Columbia Management Investment Advisers, LLC and/or any of its affiliates. Absent these fee waivers or expense reimbursement arrangements, performance results would have been lower.
The performance information shown represents past performance and
is not a guarantee of future results. The investment return and principal value of your investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than
the performance information shown. You may obtain performance information current to the most recent month-end by contacting your financial intermediary, visiting columbiathreadneedleus.com/investor/ or calling 800.345.6611.
| * | The returns shown for periods prior to the share class inception date (including returns for the Life of the Fund, if shown, which are since Fund inception) include the returns of the Fund’s oldest share class. These returns are adjusted to reflect any higher class-related operating expenses of the newer share classes, as applicable. Please visit columbiathreadneedleus.com/investor/investment-products/mutual-funds/appended-performance for more information. |
The Bloomberg Barclays 1-3 Year Municipal Bond Index is an
unmanaged index which consists of a broad selection of investment-grade general obligation and revenue bonds of maturities ranging from one year to three years.
Indices are not available for investment, are not
professionally managed and do not reflect sales charges, fees, brokerage commissions, taxes or other expenses of investing. Securities in the Fund may not match those in an index.
|
Columbia
Short Term Municipal Bond Fund | Annual Report 2019
|
3 |
Table of Contents
Fund at a Glance
(continued)
Performance of a
hypothetical $10,000 investment (April 30, 2009 — April 30, 2019)
The chart above shows the
change in value of a hypothetical $10,000 investment in Class A shares of Columbia Short Term Municipal Bond Fund during the stated time period, and does not reflect the deduction of taxes that a shareholder may pay on Fund distributions or on the
redemption of Fund shares.
| Quality breakdown (%) (at April 30, 2019) | |
| AAA rating | 7.2 |
| AA rating | 25.1 |
| A rating | 27.2 |
| BBB rating | 16.6 |
| BB rating | 0.8 |
| B rating | 0.9 |
| Not rated | 22.2 |
| Total | 100.0 |
Percentages indicated are based
upon total fixed income investments.
Bond ratings apply
to the underlying holdings of the Fund and not the Fund itself and are divided into categories ranging from highest to lowest credit quality, determined by using the middle rating of Moody’s, S&P and Fitch, after dropping the highest and
lowest available ratings. When ratings are available from only two rating agencies, the lower rating is used. When a rating is available from only one rating agency, that rating is used. When a bond is not rated by any rating agency, it is
designated as “Not rated.” Credit quality ratings assigned by a rating agency are subjective opinions, not statements of fact, and are subject to change, including daily. The ratings assigned by credit rating agencies are but one of the
considerations that the Investment Manager and/or Fund’s subadviser incorporates into its credit analysis process, along with such other issuer-specific factors as cash flows, capital structure and leverage ratios, ability to de-leverage
(repay) through free cash flow, quality of management, market positioning and access to capital, as well as such security-specific factors as the terms of the security (e.g., interest rate and time to maturity) and the amount and type of any
collateral.
|
Top
Ten States/Territories (%)
(at April 30, 2019) |
|
| New York | 26.7 |
| Illinois | 17.3 |
| New Jersey | 5.4 |
| Pennsylvania | 5.4 |
| Texas | 3.8 |
| Alabama | 3.4 |
| Connecticut | 2.9 |
| Colorado | 2.9 |
| Georgia | 2.8 |
| Minnesota | 2.5 |
Percentages indicated are based
upon total investments excluding Money Market Funds and investments in derivatives, if any.
For further detail about these holdings, please refer to the
section entitled “Portfolio of Investments.”
Fund holdings are as of the date given, are subject to change
at any time, and are not recommendations to buy or sell any security.
| 4 | Columbia Short Term Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Manager Discussion of Fund Performance
For
the 12-month period that ended April 30, 2019, the Fund’s Class A shares returned 2.39% excluding sales charges, and its Institutional shares returned 2.64%. During the same time period, the Fund’s benchmark, the Bloomberg Barclays 1-3
Year Municipal Bond Index, returned 2.64%. Effective credit quality, yield curve and sector positioning overall contributed positively, slightly offset by the mixed results of security selection and the detracting effect of duration
positioning.
Short-term tax-exempt bond market
supported by positive fundamentals and technicals
The
period was a decidedly positive one for the municipal bond market, with the broad Bloomberg Barclays Municipal Bond Index up 6.16%, posting positive absolute returns in 10 of the 12 months. Yields rallied across the yield curve, or spectrum of
maturities, with one-year, three-year and five-year municipal bond yields down 19, 40 and 56 basis points, respectively. (A basis point is 1/100th of a percentage point. Remember, there is usually an inverse relationship between bond prices and
yield movements, so that bond prices rise when yields decrease and vice versa.)
Among the major factors influencing the capital markets
broadly, and the municipal bond market more specifically, was strength in the U.S. economy, which largely avoided the travails challenging other developed market economies around the world. Also, the U.S. Federal Reserve’s (Fed) pivot away
from quarterly interest rate hikes to a more “patient” stance with less forward guidance and a more data-dependent strategy, sparked a rate rally that commenced mid-November 2018. Subdued U.S. inflation, U.S.-China trade tensions, Brexit
concerns and overall eurozone weakness further served as backdrop during the period.
Amid these conditions, the municipal bond market was supported
by generally positive credit fundamentals. Strong U.S. labor markets, improving wages and consumer spending, ongoing recovery in property values, and state and local governments enjoying improved revenues given higher property and sales tax
collections all combined to provide a constructive foundation for the municipal bond market. There were pockets of weakness in some sectors, such as health care and higher education, but, overall, rating agency upgrades exceeded downgrades.
Technicals, or the supply/demand scenario, were also favorable. Manageable supply was coupled with mostly positive flows into municipal bond investments, with the exception of the fourth quarter of 2018, when the sector experienced outflows during
heightened volatility. The Tax Cuts and Jobs Act’s cap on state and local income tax deductions, which first affected taxpayers when filing their 2018 taxes, made municipal bonds more attractive, particularly to investors in high tax states.
The reality of the impact of the U.S. Administration’s tax reform served as catalyst to a wave of buying to start 2019, as municipal bond mutual funds saw record inflows and the best start to a year since records began being kept in 1992. That
said, tax reform also curtailed bank and property and casualty insurance companies’ participation in the longer term end of the municipal bond market, leading to short-lived periods of weakness and steepening of the municipal yield
curve.
Toward the end of the period, a challenge for
investors in the short-term municipal bond market was the unusually flat front, or short-term, end of the yield curve, meaning the differential in yields between shorter term and longer term maturities had narrowed significantly. Historically, the
one- to five-year maturity range represented nearly 30% of the entire yield pickup across the 30-year term structure. However, by the end of the period, that had compressed down to less than 10%.
Credit quality, yield curve and sector positioning overall
boosted results
Lower quality securities overall
outperformed higher quality securities during the period. As such, having underweighted allocations to bonds rated AAA and AA, having overweighted allocations to lower rated bonds (i.e., A and BBB, investment-grade bonds), and having exposure to
non-rated securities, added value.
Further, yield curve
positioning proved beneficial, as the Fund had an emphasis on securities with greater than three-year maturities, which were not part of the benchmark but had outperformed the benchmark during the period. This was partially offset by the detracting
effect of the Fund’s emphasis on securities with less than one-year maturities, which were also not part of the benchmark and had underperformed the benchmark during the period given the dramatic flattening of the yield curve.
|
Columbia
Short Term Municipal Bond Fund | Annual Report 2019
|
5 |
Table of Contents
Manager Discussion of Fund Performance
(continued)
From a sector perspective, having an underweight to
pre-refunded bonds contributed positively to the Fund’s relative results. The pre-refunded sector is generally a higher quality one, which underperformed lower quality sectors during the period. Having an underweight to California-based
credits, which generally underperformed the benchmark during the period, and an overweight to Illinois-based credits, which generally outperformed the benchmark during the period, also helped. Security selection among state general obligation bonds,
education sector bonds and bonds rated AA2, proved effective as well.
Duration positioning hampered returns
The Fund’s duration positioning detracted from its
relative results during the period. (Duration is a measure of interest-rate sensitivity.) The Fund had a shorter duration stance than that of the benchmark for most of the period, which hurt as interest rates fell. The Fund had a duration of
approximately one-fourth of a year shorter than that of the benchmark during the first half of the period. Toward the end of 2018, when the rate cycle picture started to change, we began adding longer maturity securities to the Fund’s
portfolio, shifting the Fund’s duration stance to about one-tenth of a year shorter than that of the benchmark. In the process, we began to re-establish the Fund’s barbell position, which we had allowed to diminish during the time when
the Fed was more active and rates were moving higher. (A barbell position is one in which the Fund emphasizes securities at the shorter term end and longer term end of the benchmark, with a lesser focus on the intermediate-term segment.)
Security selection among bonds rated BBB also hampered the
Fund’s relative results during the period.
Fundamental analysis drove portfolio changes
As discussed above, we adjusted the Fund’s duration
during the period, though it was shorter than the benchmark throughout. From a credit quality perspective, we stayed disciplined in our up-in-quality bias during the period. More specifically, while the Fund’s exposure to non-rated notes
increased as a percentage of total net assets, the Fund’s allocation to bonds rated A decreased, while its allocation to bonds rated AAA and AA increased.
Changes to sector allocations were modest, but, at the margin,
reflected our tilt away from lower quality credit to more higher quality areas of the short-term municipal bond market. During the period, we increased the Fund’s allocations to airport, prepaid gas, student loan and housing bonds — each
a sector generally considered of higher quality but still providing attractive yield.
Fixed-income securities present
issuer
default risk. The Fund invests substantially in
municipal securities
and will be affected by tax, legislative, regulatory, demographic or political changes, as well
as changes impacting a state’s financial, economic or other conditions. A relatively small number of tax-exempt issuers may necessitate the Fund investing more heavily in a single issuer and, therefore, be more exposed to the risk of loss than
a fund that invests more broadly.
Prepayment and extension
risk exists because the timing of payments on a loan, bond or other investment may accelerate when interest rates fall or decelerate when interest
rates rise which may reduce investment opportunities and potential returns.
Market
risk may affect a single issuer, sector of the economy, industry or the market as a whole. A rise in
interest rates
may result in a price decline of fixed-income instruments held by the Fund, negatively impacting its performance and NAV. Falling rates may result in the Fund investing in lower yielding debt
instruments, lowering the Fund’s income and yield. These risks may be heightened for longer maturity and duration securities. Federal and state
tax
rules apply to capital gain distributions and any gains
or losses on sales. Income may be subject to state, local or alternative minimum taxes. See the Fund’s prospectus for more information on these and other risks.
The views expressed in this report reflect the current views of
the respective parties. These views are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict, so actual outcomes and results may differ significantly from the views expressed.
These views are subject to change at any time based upon economic, market or other conditions and the respective parties disclaim any responsibility to update such views. These views may not be relied on as investment advice and, because investment
decisions for a Columbia fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any particular Columbia fund. References to specific securities should not be construed as a recommendation or
investment advice.
| 6 | Columbia Short Term Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Understanding Your Fund’s Expenses
(Unaudited)
(Unaudited)
As an investor, you incur two types of costs. There are
shareholder transaction costs, which generally include sales charges on purchases and may include redemption fees. There are also ongoing fund costs, which generally include management fees, distribution and/or service fees, and other fund expenses.
The following information is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to help you compare these costs with the ongoing costs of investing in other mutual funds.
Analyzing your Fund’s expenses
To illustrate these ongoing costs, we have provided examples
and calculated the expenses paid by investors in each share class of the Fund during the period. The actual and hypothetical information in the table is based on an initial investment of $1,000 at the beginning of the period indicated and held for
the entire period. Expense information is calculated two ways and each method provides you with different information. The amount listed in the “Actual” column is calculated using the Fund’s actual operating expenses and total
return for the period. You may use the Actual information, together with the amount invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000
= 8.6), then multiply the results by the expenses paid during the period under the “Actual” column. The amount listed in the “Hypothetical” column assumes a 5% annual rate of return before expenses (which is not the
Fund’s actual return) and then applies the Fund’s actual expense ratio for the period to the hypothetical return. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end
of the period or the expenses you paid during the period. See “Compare with other funds” below for details on how to use the hypothetical data.
Compare with other funds
Since all mutual funds are required to include the same
hypothetical calculations about expenses in shareholder reports, you can use this information to compare the ongoing cost of investing in the Fund with other funds. To do so, compare the hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of other funds. As you compare hypothetical examples of other funds, it is important to note that hypothetical examples are meant to highlight the ongoing costs of investing in a fund only and do not reflect any
transaction costs, such as sales charges, or redemption or exchange fees. Therefore, the hypothetical calculations are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. If
transaction costs were included in these calculations, your costs would be higher.
Expenses paid during the period
are equal to the annualized expense ratio for each class as indicated above, multiplied by the average account value over the period and then multiplied by the number of days in the Fund’s most recent fiscal half year and divided by 365.
Expenses do not include fees and expenses incurred indirectly
by the Fund from its investment in underlying funds, including affiliated and non-affiliated pooled investment vehicles, such as mutual funds and exchange-traded funds.
Had Columbia Management Investment Advisers, LLC and/or certain
of its affiliates not waived/reimbursed certain fees and expenses, account value at the end of the period would have been reduced.
|
Columbia
Short Term Municipal Bond Fund | Annual Report 2019
|
7 |
Table of Contents
Portfolio of Investments
April 30, 2019
April 30, 2019
(Percentages represent value of investments compared to net
assets)
Investments in securities
The accompanying Notes to Financial Statements are an integral part
of this statement.
| 8 | Columbia Short Term Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Portfolio of Investments
(continued)
April 30, 2019
April 30, 2019
The accompanying Notes to Financial Statements are an integral part
of this statement.
|
Columbia
Short Term Municipal Bond Fund | Annual Report 2019
|
9 |
Table of Contents
Portfolio of Investments
(continued)
April 30, 2019
April 30, 2019
The accompanying Notes to Financial Statements are an integral part
of this statement.
| 10 | Columbia Short Term Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Portfolio of Investments
(continued)
April 30, 2019
April 30, 2019
The accompanying Notes to Financial Statements are an integral part
of this statement.
|
Columbia
Short Term Municipal Bond Fund | Annual Report 2019
|
11 |
Table of Contents
Portfolio of Investments
(continued)
April 30, 2019
April 30, 2019
The accompanying Notes to Financial Statements are an integral part
of this statement.
| 12 | Columbia Short Term Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Portfolio of Investments
(continued)
April 30, 2019
April 30, 2019
The accompanying Notes to Financial Statements are an integral part
of this statement.
|
Columbia
Short Term Municipal Bond Fund | Annual Report 2019
|
13 |
Table of Contents
The accompanying Notes to Financial Statements are an integral part
of this statement.
| 14 | Columbia Short Term Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Portfolio of Investments
(continued)
April 30, 2019
April 30, 2019
| Municipal Bonds (continued) | ||||
| Issue Description |
Coupon
Rate |
Principal
Amount ($) |
Value ($) | |
| Campbell-Savona Central School District | ||||
| Unlimited General Obligation Notes | ||||
| BAN Series 2018 | ||||
| 06/28/2019 | 2.750% | 7,570,000 | 7,577,541 | |
| Center Moriches Union Free School District | ||||
| Unlimited General Obligation Notes | ||||
| BAN Series 2018 | ||||
| 08/07/2019 | 2.750% | 5,000,000 | 5,010,300 | |
| City of New York | ||||
| Unlimited General Obligation Refunding Bonds | ||||
| Fiscal 2019 | ||||
| 08/01/2022 | 5.000% | 3,150,000 | 3,482,829 | |
| City of Poughkeepsie | ||||
| Limited General Obligation Notes | ||||
| BAN Series 2018A | ||||
| 05/03/2019 | 4.000% | 1,820,000 | 1,820,149 | |
| City of Poughkeepsie (g) | ||||
| Limited General Obligation Notes | ||||
| BAN Series 2019A | ||||
| 05/02/2020 | 3.000% | 1,410,000 | 1,416,923 | |
| County of Clinton | ||||
| Limited General Obligation Notes | ||||
| BAN Series 2018B | ||||
| 08/02/2019 | 2.750% | 6,873,412 | 6,885,303 | |
| General Brown Central School District | ||||
| Unlimited General Obligation Notes | ||||
| BAN Series 2018 | ||||
| 07/11/2019 | 2.750% | 5,000,000 | 5,006,100 | |
| Housing Development Corp. | ||||
| Revenue Bonds | ||||
| Series 2017C-2 | ||||
| 07/01/2021 | 1.700% | 3,000,000 | 2,991,420 | |
| Sustainable Neighborhood | ||||
| Series 2017G | ||||
| 11/01/2057 | 2.000% | 3,000,000 | 3,001,470 | |
| Metropolitan Transportation Authority | ||||
| Revenue Bonds | ||||
| BAN Series 2018B-1J | ||||
| 05/15/2020 | 5.000% | 5,250,000 | 5,422,672 | |
| Subordinated BAN Series 2018B-2 | ||||
| 05/15/2021 | 5.000% | 5,000,000 | 5,305,400 | |
| New York City Industrial Development Agency (e) | ||||
| Refunding Revenue Bonds | ||||
| Senior Trips | ||||
| Series 2012A AMT | ||||
| 07/01/2019 | 5.000% | 1,730,000 | 1,738,529 | |
| New York State Urban Development Corp. | ||||
| Refunding Revenue Bonds | ||||
| Personal Income Tax | ||||
| Series 2017 | ||||
| 03/15/2024 | 5.000% | 5,000,000 | 5,786,500 | |
The accompanying Notes to Financial Statements are an integral part
of this statement.
|
Columbia
Short Term Municipal Bond Fund | Annual Report 2019
|
15 |
Table of Contents
Portfolio of Investments
(continued)
April 30, 2019
April 30, 2019
The accompanying Notes to Financial Statements are an integral part
of this statement.
| 16 | Columbia Short Term Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Portfolio of Investments
(continued)
April 30, 2019
April 30, 2019
The accompanying Notes to Financial Statements are an integral part
of this statement.
|
Columbia
Short Term Municipal Bond Fund | Annual Report 2019
|
17 |
Table of Contents
Portfolio of Investments
(continued)
April 30, 2019
April 30, 2019
The accompanying Notes to Financial Statements are an integral part
of this statement.
| 18 | Columbia Short Term Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Portfolio of Investments
(continued)
April 30, 2019
April 30, 2019
| Municipal Short Term (continued) | ||||
| Issue Description |
Effective
Yield |
Principal
Amount ($) |
Value ($) | |
| Revenue Bonds | ||||
| Republic Services, Inc. Project | ||||
| Series 2018 AMT | ||||
| 11/01/2042 | 1.900% | 2,000,000 | 1,999,960 | |
| Total | 4,999,960 | |||
| Illinois 0.2% | ||||
| Chicago Board of Education | ||||
| Unlimited General Obligation Refunding Bonds | ||||
| Series 2018C | ||||
| 12/01/2019 | 2.680% | 1,700,000 | 1,722,729 | |
| Indiana 0.1% | ||||
| Indiana Finance Authority (e) | ||||
| Revenue Bonds | ||||
| Republic Services, Inc. Project | ||||
| Series 2012 AMT | ||||
| 12/01/2037 | 2.100% | 1,125,000 | 1,125,180 | |
| Michigan 0.5% | ||||
| Waterford School District | ||||
| Limited General Obligation Notes | ||||
| Series 2018 | ||||
| 09/25/2019 | 1.920% | 4,640,000 | 4,659,302 | |
| New Jersey 0.9% | ||||
| City of Newark | ||||
| Unlimited General Obligation Notes | ||||
| Series 2018 | ||||
| 10/09/2019 | 2.070% | 4,700,000 | 4,728,529 | |
| Tax Appeal | ||||
| 12/20/2019 | 2.070% | 3,000,000 | 3,026,550 | |
| Total | 7,755,079 | |||
| New York 10.5% | ||||
| Board of Cooperative Educational Services for the Sole Supervisory District | ||||
| Revenue Notes | ||||
| Erie #2 Chautauqua and Cattaraugus | ||||
| Series 2018 | ||||
| 06/28/2019 | 2.170% | 7,000,000 | 7,005,958 | |
| RAN Series 2018 | ||||
| 06/21/2019 | 2.150% | 5,500,000 | 5,504,267 | |
| 06/28/2019 | 2.180% | 4,000,000 | 4,004,991 | |
| City of Batavia | ||||
| Unlimited General Obligation Notes | ||||
| BAN Series 2018 | ||||
| 05/02/2019 | 2.240% | 1,600,000 | 1,600,018 | |
| City of Yonkers | ||||
| Limited General Obligation Notes | ||||
| BAN Series 2018-A | ||||
| 05/15/2019 | 2.520% | 5,000,000 | 5,000,885 | |
The accompanying Notes to Financial Statements are an integral part
of this statement.
|
Columbia
Short Term Municipal Bond Fund | Annual Report 2019
|
19 |
Table of Contents
| Money Market Funds 0.0% | ||
| Shares | Value ($) | |
| Dreyfus Tax-Exempt Cash Management Fund, Institutional Shares, 1.981% (i) | 86,800 | 86,800 |
|
Total
Money Market Funds
(Cost $86,792) |
86,800 | |
|
Total
Investments in Securities
(Cost $875,372,399) |
876,829,528 | |
| Other Assets & Liabilities, Net | 1,934,766 | |
| Net Assets | $878,764,294 | |
The accompanying Notes to Financial Statements are an integral part
of this statement.
| 20 | Columbia Short Term Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Portfolio of Investments
(continued)
April 30, 2019
April 30, 2019
Notes to Portfolio of Investments
| (a) | Represents privately placed and other securities and instruments exempt from Securities and Exchange Commission registration (collectively, private placements), such as Section 4(a)(2) and Rule 144A eligible securities, which are often sold only to qualified institutional buyers. The Fund may invest in private placements determined to be liquid as well as those determined to be illiquid. Private placements may be determined to be liquid under guidelines established by the Fund’s Board of Trustees. At April 30, 2019, the total value of these securities amounted to $16,224,206, which represents 1.85% of total net assets. |
| (b) | The Fund is entitled to receive principal and interest from the guarantor after a day or a week’s notice or upon maturity. The maturity date disclosed represents the final maturity. |
| (c) | Represents a variable rate security where the coupon rate adjusts on specified dates (generally daily or weekly) using the prevailing money market rate. The interest rate shown was the current rate as of April 30, 2019. |
| (d) | Variable rate security. The interest rate shown was the current rate as of April 30, 2019. |
| (e) | Income from this security may be subject to alternative minimum tax. |
| (f) | Zero coupon bond. |
| (g) | Represents a security purchased on a when-issued basis. |
| (h) | Municipal obligations include debt obligations issued by or on behalf of territories, possessions, or sovereign nations within the territorial boundaries of the United States. At April 30, 2019, the total value of these securities amounted to $771,795, which represents 0.09% of total net assets. |
| (i) | The rate shown is the seven-day current annualized yield at April 30, 2019. |
Abbreviation Legend
| AGM | Assured Guaranty Municipal Corporation |
| AMBAC | Ambac Assurance Corporation |
| AMT | Alternative Minimum Tax |
| BAN | Bond Anticipation Note |
| FHA | Federal Housing Authority |
| FHLMC | Federal Home Loan Mortgage Corporation |
| FNMA | Federal National Mortgage Association |
| GNMA | Government National Mortgage Association |
| NPFGC | National Public Finance Guarantee Corporation |
| TAN | Tax Anticipation Note |
Fair value
measurements
The Fund categorizes its fair value
measurements according to a three-level hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs by prioritizing that the most observable input be used when available. Observable inputs are those that market
participants would use in pricing an investment based on market data obtained from sources independent of the reporting entity. Unobservable inputs are those that reflect the Fund’s assumptions about the information market participants would
use in pricing an investment. An investment’s level within the fair value hierarchy is based on the lowest level of any input that is deemed significant to the asset’s or liability’s fair value measurement. The input levels are not
necessarily an indication of the risk or liquidity associated with investments at that level. For example, certain U.S. government securities are generally high quality and liquid, however, they are reflected as Level 2 because the inputs used to
determine fair value may not always be quoted prices in an active market.
Fair value inputs are summarized in the three broad levels
listed below:
| ■ | Level 1 — Valuations based on quoted prices for investments in active markets that the Fund has the ability to access at the measurement date. Valuation adjustments are not applied to Level 1 investments. |
| ■ | Level 2 — Valuations based on other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risks, etc.). |
| ■ | Level 3 — Valuations based on significant unobservable inputs (including the Fund’s own assumptions and judgment in determining the fair value of investments). |
Inputs that are used in determining fair value of an investment
may include price information, credit data, volatility statistics, and other factors. These inputs can be either observable or unobservable. The availability of observable inputs can vary between investments, and is affected by various factors such
as the type of investment, and the volume and level of activity for that investment or similar investments in the marketplace. The inputs will be considered by the Investment Manager, along with any other relevant factors in the calculation of an
investment’s fair value. The Fund uses prices and inputs that are current as of the measurement date, which may include periods of market dislocations. During these periods, the availability of prices and inputs may be reduced for many
investments. This condition could cause an investment to be reclassified between the various levels within the hierarchy.
Investments falling into the Level 3 category are primarily
supported by quoted prices from brokers and dealers participating in the market for those investments. However, these may be classified as Level 3 investments due to lack of market transparency and corroboration to support these quoted prices.
Additionally, valuation models may be used as the pricing source for any remaining investments classified as Level 3. These models may rely on one or more significant unobservable inputs and/or significant assumptions by the Investment Manager.
Inputs used in valuations may include, but are not limited to, financial statement analysis, capital account balances, discount rates and estimated cash flows, and comparable company data.
Under the direction of the Fund’s Board of Trustees (the
Board), the Investment Manager’s Valuation Committee (the Committee) is responsible for overseeing the valuation procedures approved by the Board. The Committee consists of voting and non-voting members from various groups within the
Investment Manager’s organization, including operations and accounting, trading and investments, compliance, risk management and legal.
The accompanying Notes to Financial Statements are an integral part of this
statement.
|
Columbia
Short Term Municipal Bond Fund | Annual Report 2019
|
21 |
Table of Contents
Portfolio of Investments
(continued)
April 30, 2019
April 30, 2019
Fair value
measurements
(continued)
The Committee meets at least monthly to review and approve valuation matters, which may include a description of specific valuation determinations, data regarding pricing information received from approved pricing vendors and brokers and the results of Board-approved valuation control policies and procedures (the Policies). The Policies address, among other things, instances when market quotations are or are not readily available, including recommendations of third party pricing vendors and a determination of appropriate pricing methodologies; events that require specific valuation determinations and assessment of fair value techniques; securities with a potential for stale pricing, including those that are illiquid, restricted, or in default; and the effectiveness of third party pricing vendors, including periodic reviews of vendors. The Committee meets more frequently, as needed, to discuss additional valuation matters, which may include the need to review back-testing results, review time-sensitive information or approve related valuation actions. The Committee reports to the Board, with members of the Committee meeting with the Board at each of its regularly scheduled meetings to discuss valuation matters and actions during the period, similar to those described earlier.
The Committee meets at least monthly to review and approve valuation matters, which may include a description of specific valuation determinations, data regarding pricing information received from approved pricing vendors and brokers and the results of Board-approved valuation control policies and procedures (the Policies). The Policies address, among other things, instances when market quotations are or are not readily available, including recommendations of third party pricing vendors and a determination of appropriate pricing methodologies; events that require specific valuation determinations and assessment of fair value techniques; securities with a potential for stale pricing, including those that are illiquid, restricted, or in default; and the effectiveness of third party pricing vendors, including periodic reviews of vendors. The Committee meets more frequently, as needed, to discuss additional valuation matters, which may include the need to review back-testing results, review time-sensitive information or approve related valuation actions. The Committee reports to the Board, with members of the Committee meeting with the Board at each of its regularly scheduled meetings to discuss valuation matters and actions during the period, similar to those described earlier.
For investments categorized as Level 3, the Committee monitors
information similar to that described above, which may include: (i) data specific to the issuer or comparable issuers, (ii) general market or specific sector news and (iii) quoted prices and specific or similar security transactions. The Committee
considers this data and any changes from prior periods in order to assess the reasonableness of observable and unobservable inputs, any assumptions or internal models used to value those securities and changes in fair value. This data is also used
to corroborate, when available, information received from approved pricing vendors and brokers. Various factors impact the frequency of monitoring this information (which may occur as often as daily). However, the Committee may determine that
changes to inputs, assumptions and models are not required as a result of the monitoring procedures performed.
The following table is a summary of the inputs used to value the
Fund’s investments at April 30, 2019:
|
Level
1
quoted prices in active markets for identical assets ($) |
Level
2
other significant observable inputs ($) |
Level
3
significant unobservable inputs ($) |
Total ($) | |
| Investments in Securities | ||||
| Floating Rate Notes | — | 6,850,000 | — | 6,850,000 |
| Municipal Bonds | — | 753,386,241 | — | 753,386,241 |
| Municipal Short Term | — | 116,506,487 | — | 116,506,487 |
| Money Market Funds | 86,800 | — | — | 86,800 |
| Total Investments in Securities | 86,800 | 876,742,728 | — | 876,829,528 |
See the Portfolio of Investments for
all investment classifications not indicated in the table.
The Fund’s assets assigned to the Level 2 input category
are generally valued using the market approach, in which a security’s value is determined through reference to prices and information from market transactions for similar or identical assets.
There were no transfers of financial assets between levels
during the period.
The accompanying Notes to Financial Statements are an integral part of this
statement.
| 22 | Columbia Short Term Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Statement of Assets and Liabilities
April 30, 2019
April 30, 2019
| Assets | |
| Investments in securities, at value | |
| Unaffiliated issuers (cost $875,372,399) | $876,829,528 |
| Cash | 35,709 |
| Receivable for: | |
| Investments sold | 771,467 |
| Capital shares sold | 301,797 |
| Interest | 11,795,314 |
| Expense reimbursement due from Investment Manager | 3,485 |
| Prepaid expenses | 1,202 |
| Total assets | 889,738,502 |
| Liabilities | |
| Payable for: | |
| Investments purchased on a delayed delivery basis | 8,454,184 |
| Capital shares purchased | 887,997 |
| Distributions to shareholders | 1,390,693 |
| Management services fees | 10,311 |
| Distribution and/or service fees | 642 |
| Transfer agent fees | 22,627 |
| Compensation of board members | 159,715 |
| Other expenses | 48,039 |
| Total liabilities | 10,974,208 |
| Net assets applicable to outstanding capital stock | $878,764,294 |
| Represented by | |
| Paid in capital | 882,613,796 |
| Total distributable earnings (loss) (Note 2) | (3,849,502) |
| Total - representing net assets applicable to outstanding capital stock | $878,764,294 |
| Class A | |
| Net assets | $68,355,119 |
| Shares outstanding | 6,604,512 |
| Net asset value per share | $10.35 |
| Maximum sales charge | 1.00% |
| Maximum offering price per share (calculated by dividing the net asset value per share by 1.0 minus the maximum sales charge for Class A shares) | $10.45 |
| Advisor Class | |
| Net assets | $2,026,551 |
| Shares outstanding | 195,604 |
| Net asset value per share | $10.36 |
| Class C | |
| Net assets | $6,322,097 |
| Shares outstanding | 611,259 |
| Net asset value per share | $10.34 |
| Institutional Class | |
| Net assets | $104,299,526 |
| Shares outstanding | 10,077,744 |
| Net asset value per share | $10.35 |
| Institutional 2 Class | |
| Net assets | $27,328,774 |
| Shares outstanding | 2,641,351 |
| Net asset value per share | $10.35 |
| Institutional 3 Class | |
| Net assets | $670,432,227 |
| Shares outstanding | 64,806,258 |
| Net asset value per share | $10.35 |
The accompanying Notes to Financial Statements are an integral part of this
statement.
|
Columbia
Short Term Municipal Bond Fund | Annual Report 2019
|
23 |
Table of Contents
Statement of Operations
Year Ended April 30, 2019
Year Ended April 30, 2019
| Net investment income | |
| Income: | |
| Dividends — unaffiliated issuers | $41,716 |
| Interest | 21,093,935 |
| Interfund lending | 2,344 |
| Total income | 21,137,995 |
| Expenses: | |
| Management services fees | 4,291,515 |
| Distribution and/or service fees | |
| Class A | 185,918 |
| Class C | 80,278 |
| Transfer agent fees | |
| Class A | 75,802 |
| Advisor Class | 1,455 |
| Class C | 8,178 |
| Institutional Class | 108,481 |
| Institutional 2 Class | 11,606 |
| Institutional 3 Class | 58,470 |
| Compensation of board members | 29,036 |
| Custodian fees | 10,501 |
| Printing and postage fees | 18,195 |
| Registration fees | 126,149 |
| Audit fees | 34,650 |
| Legal fees | 15,898 |
| Compensation of chief compliance officer | 227 |
| Other | 25,189 |
| Total expenses | 5,081,548 |
| Fees waived or expenses reimbursed by Investment Manager and its affiliates | (1,404,854) |
| Expense reduction | (40) |
| Total net expenses | 3,676,654 |
| Net investment income | 17,461,341 |
| Realized and unrealized gain (loss) — net | |
| Net realized gain (loss) on: | |
| Investments — unaffiliated issuers | (3,463,090) |
| Net realized loss | (3,463,090) |
| Net change in unrealized appreciation (depreciation) on: | |
| Investments — unaffiliated issuers | 12,199,546 |
| Net change in unrealized appreciation (depreciation) | 12,199,546 |
| Net realized and unrealized gain | 8,736,456 |
| Net increase in net assets resulting from operations | $26,197,797 |
The accompanying Notes to Financial Statements are an
integral part of this statement.
| 24 | Columbia Short Term Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Statement of Changes in Net Assets
|
Year
Ended
April 30, 2019 |
Year
Ended
April 30, 2018 |
|
| Operations | ||
| Net investment income | $17,461,341 | $18,067,125 |
| Net realized loss | (3,463,090) | (1,135,370) |
| Net change in unrealized appreciation (depreciation) | 12,199,546 | (9,538,429) |
| Net increase in net assets resulting from operations | 26,197,797 | 7,393,326 |
| Distributions to shareholders | ||
| Net investment income and net realized gains | ||
| Class A | (1,100,433) | |
| Advisor Class | (25,479) | |
| Class C | (57,844) | |
| Institutional Class | (1,850,159) | |
| Institutional 2 Class | (351,280) | |
| Institutional 3 Class | (14,457,188) | |
| Net investment income | ||
| Class A | (1,103,543) | |
| Advisor Class | (13,684) | |
| Class B | (8) | |
| Class C | (43,285) | |
| Institutional Class | (6,394,562) | |
| Institutional 2 Class | (205,669) | |
| Institutional 3 Class | (10,736,230) | |
| Total distributions to shareholders (Note 2) | (17,842,383) | (18,496,981) |
| Decrease in net assets from capital stock activity | (267,210,033) | (354,956,693) |
| Total decrease in net assets | (258,854,619) | (366,060,348) |
| Net assets at beginning of year | 1,137,618,913 | 1,503,679,261 |
| Net assets at end of year | $878,764,294 | $1,137,618,913 |
| Undistributed net investment income | $346,496 | $727,538 |
The accompanying Notes to Financial Statements are an
integral part of this statement.
|
Columbia
Short Term Municipal Bond Fund | Annual Report 2019
|
25 |
Table of Contents
Statement of Changes in Net Assets
(continued)
| Year Ended | Year Ended | |||
| April 30, 2019 | April 30, 2018 | |||
| Shares | Dollars ($) | Shares | Dollars ($) | |
| Capital stock activity | ||||
| Class A | ||||
| Subscriptions | 5,549,430 | 57,137,206 | 2,449,058 | 25,363,429 |
| Distributions reinvested | 91,113 | 938,366 | 89,887 | 929,330 |
| Redemptions | (7,183,034) | (73,938,052) | (4,698,890) | (48,652,288) |
| Net decrease | (1,542,491) | (15,862,480) | (2,159,945) | (22,359,529) |
| Advisor Class | ||||
| Subscriptions | 341,970 | 3,523,934 | 112,053 | 1,163,795 |
| Distributions reinvested | 1,462 | 15,076 | 1,307 | 13,526 |
| Redemptions | (206,901) | (2,134,146) | (154,797) | (1,602,924) |
| Net increase (decrease) | 136,531 | 1,404,864 | (41,437) | (425,603) |
| Class B | ||||
| Redemptions | — | — | (1,591) | (16,497) |
| Net decrease | — | — | (1,591) | (16,497) |
| Class C | ||||
| Subscriptions | 196,085 | 2,012,868 | 109,723 | 1,132,629 |
| Distributions reinvested | 3,945 | 40,613 | 2,693 | 27,796 |
| Redemptions | (595,991) | (6,136,830) | (518,913) | (5,367,897) |
| Net decrease | (395,961) | (4,083,349) | (406,497) | (4,207,472) |
| Institutional Class | ||||
| Subscriptions | 4,294,471 | 44,184,155 | 12,544,502 | 130,090,046 |
| Distributions reinvested | 145,824 | 1,502,190 | 130,328 | 1,347,487 |
| Redemptions | (5,347,389) | (55,060,061) | (133,629,684) | (1,389,556,931) |
| Net decrease | (907,094) | (9,373,716) | (120,954,854) | (1,258,119,398) |
| Institutional 2 Class | ||||
| Subscriptions | 1,969,551 | 20,327,164 | 2,095,745 | 21,578,811 |
| Distributions reinvested | 17,250 | 177,688 | 18,515 | 191,293 |
| Redemptions | (1,179,839) | (12,137,714) | (1,675,981) | (17,254,744) |
| Net increase | 806,962 | 8,367,138 | 438,279 | 4,515,360 |
| Institutional 3 Class | ||||
| Subscriptions | 3,780,277 | 38,902,377 | 112,105,218 | 1,165,355,248 |
| Distributions reinvested | 5,028 | 51,775 | 1,815 | 18,690 |
| Redemptions | (27,872,296) | (286,616,642) | (23,214,750) | (239,717,492) |
| Net increase (decrease) | (24,086,991) | (247,662,490) | 88,892,283 | 925,656,446 |
| Total net decrease | (25,989,044) | (267,210,033) | (34,233,762) | (354,956,693) |
The accompanying Notes to Financial Statements are an integral part of this
statement.
| 26 | Columbia Short Term Municipal Bond Fund | Annual Report 2019 |
Table of Contents
[THIS PAGE INTENTIONALLY LEFT BLANK]
|
Columbia
Short Term Municipal Bond Fund | Annual Report 2019
|
27 |
Table of Contents
Financial Highlights
The
following table is intended to help you understand the Fund’s financial performance. Certain information reflects financial results for a single share of a class held for the periods shown. Per share net investment income (loss) amounts are
calculated based on average shares outstanding during the period. Total return assumes reinvestment of all dividends and distributions, if any. Total return does not reflect payment of sales charges, if any. Total return and portfolio turnover are
not annualized for periods of less than one year. The portfolio turnover rate is calculated without regard to purchase and sales transactions of short-term instruments and certain derivatives, if any. If such transactions were included, the
Fund’s portfolio turnover rate may be higher.
|
Net
asset value,
beginning of period |
Net
investment income (loss) |
Net
realized and unrealized gain (loss) |
Total
from
investment operations |
Distributions
from net investment income |
Total
distributions to shareholders |
|
| Class A | ||||||
| Year Ended 4/30/2019 | $10.26 | 0.15 | 0.09 | 0.24 | (0.15) | (0.15) |
| Year Ended 4/30/2018 | $10.36 | 0.11 | (0.09) | 0.02 | (0.12) | (0.12) |
| Year Ended 4/30/2017 | $10.43 | 0.09 | (0.06) | 0.03 | (0.10) | (0.10) |
| Year Ended 4/30/2016 | $10.42 | 0.07 | 0.01 | 0.08 | (0.07) | (0.07) |
| Year Ended 4/30/2015 | $10.48 | 0.08 | (0.06) | 0.02 | (0.08) | (0.08) |
| Advisor Class | ||||||
| Year Ended 4/30/2019 | $10.27 | 0.18 | 0.09 | 0.27 | (0.18) | (0.18) |
| Year Ended 4/30/2018 | $10.36 | 0.14 | (0.09) | 0.05 | (0.14) | (0.14) |
| Year Ended 4/30/2017 | $10.43 | 0.12 | (0.07) | 0.05 | (0.12) | (0.12) |
| Year Ended 4/30/2016 | $10.41 | 0.09 | 0.02 | 0.11 | (0.09) | (0.09) |
| Year Ended 4/30/2015 | $10.47 | 0.11 | (0.06) | 0.05 | (0.11) | (0.11) |
| Class C | ||||||
| Year Ended 4/30/2019 | $10.25 | 0.07 | 0.10 | 0.17 | (0.08) | (0.08) |
| Year Ended 4/30/2018 | $10.35 | 0.03 | (0.09) | (0.06) | (0.04) | (0.04) |
| Year Ended 4/30/2017 | $10.42 | 0.01 | (0.06) | (0.05) | (0.02) | (0.02) |
| Year Ended 4/30/2016 | $10.42 | (0.01) | 0.01 | 0.00 (d) | (0.00) (d) | (0.00) (d) |
| Year Ended 4/30/2015 | $10.48 | 0.00 (d) | (0.06) | (0.06) | (0.00) (d) | (0.00) (d) |
| Institutional Class | ||||||
| Year Ended 4/30/2019 | $10.26 | 0.18 | 0.09 | 0.27 | (0.18) | (0.18) |
| Year Ended 4/30/2018 | $10.36 | 0.13 | (0.09) | 0.04 | (0.14) | (0.14) |
| Year Ended 4/30/2017 | $10.43 | 0.12 | (0.07) | 0.05 | (0.12) | (0.12) |
| Year Ended 4/30/2016 | $10.42 | 0.09 | 0.01 | 0.10 | (0.09) | (0.09) |
| Year Ended 4/30/2015 | $10.48 | 0.11 | (0.06) | 0.05 | (0.11) | (0.11) |
| Institutional 2 Class | ||||||
| Year Ended 4/30/2019 | $10.26 | 0.18 | 0.09 | 0.27 | (0.18) | (0.18) |
| Year Ended 4/30/2018 | $10.35 | 0.15 | (0.09) | 0.06 | (0.15) | (0.15) |
| Year Ended 4/30/2017 | $10.42 | 0.13 | (0.07) | 0.06 | (0.13) | (0.13) |
| Year Ended 4/30/2016 | $10.41 | 0.10 | 0.01 | 0.11 | (0.10) | (0.10) |
| Year Ended 4/30/2015 | $10.47 | 0.12 | (0.06) | 0.06 | (0.12) | (0.12) |
The accompanying Notes to Financial Statements are an
integral part of this statement.
| 28 | Columbia Short Term Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Financial Highlights
(continued)
|
Net
asset value, end of period |
Total
return |
Total
gross
expense ratio to average net assets (a) |
Total
net
expense ratio to average net assets (a),(b) |
Net
investment
income (loss) ratio to average net assets |
Portfolio
turnover |
Net
assets, end of period (000’s) |
|
| Class A | |||||||
| Year Ended 4/30/2019 | $10.35 | 2.39% | 0.81% | 0.66% (c) | 1.44% | 55% | $68,355 |
| Year Ended 4/30/2018 | $10.26 | 0.16% | 0.81% | 0.67% (c) | 1.08% | 36% | $83,580 |
| Year Ended 4/30/2017 | $10.36 | 0.26% | 0.86% | 0.71% (c) | 0.86% | 46% | $106,751 |
| Year Ended 4/30/2016 | $10.43 | 0.74% | 0.89% | 0.72% (c) | 0.64% | 37% | $127,769 |
| Year Ended 4/30/2015 | $10.42 | 0.22% | 0.89% | 0.73% (c) | 0.79% | 28% | $130,876 |
| Advisor Class | |||||||
| Year Ended 4/30/2019 | $10.36 | 2.64% | 0.56% | 0.41% (c) | 1.74% | 55% | $2,027 |
| Year Ended 4/30/2018 | $10.27 | 0.51% | 0.56% | 0.42% (c) | 1.33% | 36% | $607 |
| Year Ended 4/30/2017 | $10.36 | 0.51% | 0.62% | 0.45% (c) | 1.15% | 46% | $1,041 |
| Year Ended 4/30/2016 | $10.43 | 1.09% | 0.64% | 0.47% (c) | 0.89% | 37% | $544 |
| Year Ended 4/30/2015 | $10.41 | 0.47% | 0.65% | 0.48% (c) | 1.04% | 28% | $568 |
| Class C | |||||||
| Year Ended 4/30/2019 | $10.34 | 1.62% | 1.55% | 1.41% (c) | 0.69% | 55% | $6,322 |
| Year Ended 4/30/2018 | $10.25 | (0.59%) | 1.56% | 1.42% (c) | 0.33% | 36% | $10,327 |
| Year Ended 4/30/2017 | $10.35 | (0.48%) | 1.61% | 1.46% (c) | 0.11% | 46% | $14,630 |
| Year Ended 4/30/2016 | $10.42 | 0.00% (d) | 1.64% | 1.47% (c) | (0.10%) | 37% | $19,074 |
| Year Ended 4/30/2015 | $10.42 | (0.53%) | 1.64% | 1.48% (c) | 0.04% | 28% | $21,184 |
| Institutional Class | |||||||
| Year Ended 4/30/2019 | $10.35 | 2.64% | 0.56% | 0.41% (c) | 1.70% | 55% | $104,300 |
| Year Ended 4/30/2018 | $10.26 | 0.40% | 0.58% | 0.44% (c) | 1.21% | 36% | $112,699 |
| Year Ended 4/30/2017 | $10.36 | 0.51% | 0.61% | 0.46% (c) | 1.11% | 46% | $1,366,779 |
| Year Ended 4/30/2016 | $10.43 | 0.99% | 0.64% | 0.47% (c) | 0.89% | 37% | $1,623,807 |
| Year Ended 4/30/2015 | $10.42 | 0.47% | 0.64% | 0.48% (c) | 1.04% | 28% | $1,699,650 |
| Institutional 2 Class | |||||||
| Year Ended 4/30/2019 | $10.35 | 2.69% | 0.51% | 0.36% | 1.76% | 55% | $27,329 |
| Year Ended 4/30/2018 | $10.26 | 0.55% | 0.51% | 0.37% | 1.41% | 36% | $18,813 |
| Year Ended 4/30/2017 | $10.35 | 0.61% | 0.50% | 0.36% | 1.21% | 46% | $14,452 |
| Year Ended 4/30/2016 | $10.42 | 1.10% | 0.49% | 0.37% | 1.00% | 37% | $22,159 |
| Year Ended 4/30/2015 | $10.41 | 0.57% | 0.49% | 0.38% | 1.14% | 28% | $15,024 |
The accompanying Notes to Financial Statements are an
integral part of this statement.
|
Columbia
Short Term Municipal Bond Fund | Annual Report 2019
|
29 |
Table of Contents
Financial Highlights
(continued)
|
Net
asset value,
beginning of period |
Net
investment income (loss) |
Net
realized and unrealized gain (loss) |
Total
from
investment operations |
Distributions
from net investment income |
Total
distributions to shareholders |
|
| Institutional 3 Class | ||||||
| Year Ended 4/30/2019 | $10.25 | 0.18 | 0.11 | 0.29 | (0.19) | (0.19) |
| Year Ended 4/30/2018 | $10.36 | 0.15 | (0.11) | 0.04 | (0.15) | (0.15) |
| Year Ended 4/30/2017 (e) | $10.35 | 0.02 | 0.01 (f) | 0.03 | (0.02) | (0.02) |
| Notes to Financial Highlights | |
| (a) | In addition to the fees and expenses that the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of any other funds in which it invests. Such indirect expenses are not included in the Fund’s reported expense ratios. |
| (b) | Total net expenses include the impact of certain fee waivers/expense reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
| (c) | The benefits derived from expense reductions had an impact of less than 0.01%. |
| (d) | Rounds to zero. |
| (e) | Institutional 3 Class shares commenced operations on March 1, 2017. Per share data and total return reflect activity from that date. |
| (f) | Calculation of the net gain (loss) per share (both realized and unrealized) does not correlate to the aggregate realized and unrealized gain (loss) presented in the Statement of Operations due to the timing of subscriptions and redemptions of Fund shares in relation to fluctuations in the market value of the portfolio. |
| (g) | Annualized. |
The accompanying Notes to Financial Statements are an
integral part of this statement.
| 30 | Columbia Short Term Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Financial Highlights
(continued)
|
Net
asset value, end of period |
Total
return |
Total
gross
expense ratio to average net assets (a) |
Total
net
expense ratio to average net assets (a),(b) |
Net
investment
income (loss) ratio to average net assets |
Portfolio
turnover |
Net
assets, end of period (000’s) |
|
| Institutional 3 Class | |||||||
| Year Ended 4/30/2019 | $10.35 | 2.84% | 0.46% | 0.32% | 1.78% | 55% | $670,432 |
| Year Ended 4/30/2018 | $10.25 | 0.41% | 0.46% | 0.33% | 1.50% | 36% | $911,594 |
| Year Ended 4/30/2017 (e) | $10.36 | 0.33% | 0.50% (g) | 0.31% (g) | 1.42% (g) | 46% | $10 |
The accompanying Notes to Financial Statements are an integral part of this
statement.
|
Columbia
Short Term Municipal Bond Fund | Annual Report 2019
|
31 |
Table of Contents
Notes to Financial Statements
April 30, 2019
April 30, 2019
Note 1. Organization
Columbia Short Term Municipal Bond Fund (the Fund), a series
of Columbia Funds Series Trust (the Trust), is a diversified fund. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Delaware statutory
trust.
Fund shares
The Trust may issue an unlimited number of shares (without par
value). Although all share classes generally have identical voting, dividend and liquidation rights, each share class votes separately when required by the Trust’s organizational documents or by law. Different share classes pay different
distribution amounts to the extent the expenses of such share classes differ, and distributions in liquidation will be proportional to the net asset value of each share class. Each share class has its own expense and sales charge structure. The Fund
offers each of the share classes identified below.
Class
A shares are subject to a maximum front-end sales charge of 1.00% based on the initial investment amount. Class A shares purchased without an initial sales charge are subject to a contingent deferred sales charge (CDSC) of 0.50% on certain
investments of $500,000 or more if redeemed within 12 months after purchase.
Advisor Class shares are not subject to sales charges and are
generally available only to omnibus retirement plans and certain investors as described in the Fund’s prospectus.
Class C shares are subject to a 1.00% CDSC on shares redeemed
within 12 months after purchase. Effective July 1, 2018, Class C shares automatically convert to Class A shares of the same Fund in the month of or the month following the 10-year anniversary of the Class C shares purchase date.
Institutional Class shares are not subject to sales charges
and are generally available only to eligible investors, which are subject to different investment minimums as described in the Fund’s prospectus.
Institutional 2 Class shares are not subject to sales charges
and are generally available only to investors purchasing through authorized investment professionals and omnibus retirement plans as described in the Fund’s prospectus.
Institutional 3 Class shares are not subject to sales charges
and are available to institutional and certain other investors as described in the Fund’s prospectus.
Note 2. Summary of significant accounting
policies
Basis of preparation
The Fund is an investment company that applies the accounting
and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946,
Financial Services - Investment Companies
(ASC 946). The financial statements are prepared
in accordance with U.S. generally accepted accounting principles (GAAP), which requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
The following is a summary of significant accounting policies
followed by the Fund in the preparation of its financial statements.
Security valuation
Debt securities generally are valued by pricing services
approved by the Board of Trustees based upon market transactions for normal, institutional-size trading units of similar securities. The services may use various pricing techniques that take into account, as applicable, factors such as yield,
quality, coupon rate, maturity, type of issue, trading characteristics and other data, as well as approved independent broker-dealer quotes. Debt securities for which quotations are not readily available or not believed to be reflective of market
value may also be valued based upon a bid quote from an approved independent broker-dealer. Debt securities maturing in 60 days or less are valued primarily at amortized cost value, unless this method results in a valuation that management believes
does not approximate market value.
| 32 | Columbia Short Term Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Notes to Financial Statements
(continued)
April 30, 2019
April 30, 2019
Investments in open-end investment companies, including money
market funds, are valued at their latest net asset value.
Investments for which market quotations are not readily
available, or that have quotations which management believes are not reflective of market value or reliable, are valued at fair value as determined in good faith under procedures approved by and under the general supervision of the Board of
Trustees. If a security or class of securities (such as foreign securities) is valued at fair value, such value is likely to be different from the quoted or published price for the security.
The determination of fair value often requires significant
judgment. To determine fair value, management may use assumptions including but not limited to future cash flows and estimated risk premiums. Multiple inputs from various sources may be used to determine fair value.
GAAP requires disclosure regarding the inputs and valuation
techniques used to measure fair value and any changes in valuation inputs or techniques. In addition, investments shall be disclosed by major category. This information is disclosed following the Fund’s Portfolio of Investments.
Delayed delivery securities
The Fund may trade securities on other than normal settlement
terms, including securities purchased or sold on a “when-issued” or "forward commitment" basis. This may increase risk to the Fund since the other party to the transaction may fail to deliver, which could cause the Fund to subsequently
invest at less advantageous prices. The Fund designates cash or liquid securities in an amount equal to the delayed delivery commitment.
Security transactions
Security transactions are accounted for on the trade date.
Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes.
Income recognition
Interest income is recorded on an accrual basis. Market
premiums and discounts, including original issue discounts, are amortized and accreted, respectively, over the expected life of the security on all debt securities, unless otherwise noted.
The Fund may place a debt security on non-accrual status and
reduce related interest income when it becomes probable that the interest will not be collected and the amount of uncollectible interest can be reasonably estimated. A defaulted debt security is removed from non-accrual status when the issuer
resumes interest payments or when collectibility of interest is reasonably assured.
Dividend income is recorded on the ex-dividend date.
Expenses
General expenses of the Trust are allocated to the Fund and
other funds of the Trust based upon relative net assets or other expense allocation methodologies determined by the nature of the expense. Expenses directly attributable to the Fund are charged to the Fund. Expenses directly attributable to a
specific class of shares are charged to that share class.
Determination of class net asset value
All income, expenses (other than class-specific expenses,
which are charged to that share class, as shown in the Statement of Operations) and realized and unrealized gains (losses) are allocated to each class of the Fund on a daily basis, based on the relative net assets of each class, for purposes of
determining the net asset value of each class.
Federal
income tax status
The Fund intends to qualify each year
as a regulated investment company under Subchapter M of the Internal Revenue Code, as amended, and will distribute substantially all of its net tax-exempt and investment company taxable income and net capital gain, if any, for its tax year, and as
such will not be subject to federal income taxes. In addition, the Fund intends to distribute in each calendar year substantially all of its ordinary income, capital gain net income and certain other amounts, if any, such that the Fund should not be
subject to federal excise tax. Therefore, no federal income or excise tax provision is recorded.
|
Columbia
Short Term Municipal Bond Fund | Annual Report 2019
|
33 |
Table of Contents
Notes to Financial Statements
(continued)
April 30, 2019
April 30, 2019
Distributions to shareholders
Distributions from net investment income, if any, are declared
daily and paid monthly. Net realized capital gains, if any, are distributed at least annually. Income distributions and capital gain distributions are determined in accordance with federal income tax regulations, which may differ from GAAP.
Guarantees and indemnifications
Under the Trust’s organizational documents and, in some
cases, by contract, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust or its funds. In addition, certain of the Fund’s contracts with its service providers contain
general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown since the amount of any future claims that may be made against the Fund cannot be determined, and the Fund has no historical basis for predicting
the likelihood of any such claims.
Recent accounting
pronouncements
Accounting Standards Update 2017-08
Premium Amortization on Purchased Callable Debt Securities
In March 2017, the Financial Accounting Standards Board issued
Accounting Standards Update (ASU) No. 2017-08 Premium Amortization on Purchased Callable Debt Securities. ASU No. 2017-08 updates the accounting standards to shorten the amortization period for certain purchased callable debt securities, held at a
premium, to be amortized to the earliest call date. The update applies to securities with explicit, noncontingent call features that are callable at fixed prices and on preset dates. The standard is effective for annual periods beginning after
December 15, 2018 and interim periods within those fiscal years. Management does not expect the implementation of this guidance to have a material impact on the financial statement amounts and footnote disclosures.
Accounting Standards Update 2018-13 Disclosure Framework -
Changes to the Disclosure Requirements for Fair Value Measurement
In August 2018, the Financial Accounting Standards Board
issued Accounting Standards Update (ASU) No. 2018-13 Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. ASU No. 2018-13, in addition to other modifications and additions, removes the requirement to disclose the
amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy and the policy for the timing of transfers between levels. The standard is effective for annual periods beginning after December 15, 2019 and interim periods
within those fiscal years. At this time, management is evaluating the implication of this guidance and the impact it will have on the financial statement disclosures, if any.
Disclosure Update and Simplification
In September 2018, the Securities and Exchange Commission
(SEC) released Final Rule 33-10532, Disclosure Update and Simplification, which amends certain financial statement disclosure requirements that the SEC determined to be redundant, outdated, or superseded in light of other SEC disclosure
requirements, GAAP, or changes in the information environment. As a result of the amendments, management implemented disclosure changes which included removing the components of distributable earnings presented on the Statement of Assets and
Liabilities and combining income and gain distributions paid to shareholders as presented on the Statement of Changes in Net Assets. Any values presented to meet prior year requirements were left unchanged. The amendments had no effect on the
Fund’s net assets or results of operation.
Note
3. Fees and other transactions with affiliates
Management services fees
The Fund has entered into a Management Agreement with Columbia
Management Investment Advisers, LLC (the Investment Manager), a wholly-owned subsidiary of Ameriprise Financial, Inc. (Ameriprise Financial). Under the Management Agreement, the Investment Manager provides the Fund with investment research and
advice, as well as administrative and accounting services. The management services fee is an annual fee that is equal to a percentage of the Fund’s daily net assets that declines from 0.43% to 0.28% as the Fund’s net assets increase. The
effective management services fee rate for the year ended April 30, 2019 was 0.43% of the Fund’s average daily net assets.
| 34 | Columbia Short Term Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Notes to Financial Statements
(continued)
April 30, 2019
April 30, 2019
Compensation of board members
Members of the Board of Trustees who are not officers or
employees of the Investment Manager or Ameriprise Financial are compensated for their services to the Fund as disclosed in the Statement of Operations. Under a Deferred Compensation Plan (the Deferred Plan), these members of the Board of Trustees
may elect to defer payment of up to 100% of their compensation. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of certain funds managed by the Investment Manager. The Fund’s liability for these
amounts is adjusted for market value changes and remains in the Fund until distributed in accordance with the Deferred Plan. All amounts payable under the Deferred Plan constitute a general unsecured obligation of the Fund.
Compensation of Chief Compliance Officer
The Board of Trustees has appointed a Chief Compliance Officer
to the Fund in accordance with federal securities regulations. As disclosed in the Statement of Operations, a portion of the Chief Compliance Officer’s total compensation is allocated to the Fund, along with other allocations to affiliated
registered investment companies managed by the Investment Manager and its affiliates, based on relative net assets.
Transfer agency fees
Under a Transfer and Dividend Disbursing Agent Agreement,
Columbia Management Investment Services Corp. (the Transfer Agent), an affiliate of the Investment Manager and a wholly-owned subsidiary of Ameriprise Financial, is responsible for providing transfer agency services to the Fund. The Transfer Agent
has contracted with DST Asset Manager Solutions, Inc. (DST) to serve as sub-transfer agent. The Transfer Agent pays the fees of DST for services as sub-transfer agent and DST is not entitled to reimbursement for such fees from the Fund (with the
exception of out-of-pocket fees).
The Fund pays the
Transfer Agent a monthly transfer agency fee based on the number or the average value of accounts, depending on the type of account. In addition, the Fund pays the Transfer Agent a fee for shareholder services based on the number of accounts or on a
percentage of the average aggregate value of the Fund’s shares maintained in omnibus accounts up to the lesser of the amount charged by the financial intermediary or a cap established by the Board of Trustees from time to time.
The Transfer Agent also receives compensation from the Fund
for various shareholder services and reimbursements for certain out-of-pocket fees. Total transfer agency fees for Institutional 2 Class and Institutional 3 Class shares are subject to an annual limitation of not more than 0.07% and 0.02%,
respectively, of the average daily net assets attributable to each share class.
For the year ended April 30, 2019, the Fund’s effective
transfer agency fee rates as a percentage of average daily net assets of each class were as follows:
| Effective rate (%) | |
| Class A | 0.10 |
| Advisor Class | 0.10 |
| Class C | 0.10 |
| Institutional Class | 0.10 |
| Institutional 2 Class | 0.06 |
| Institutional 3 Class | 0.01 |
An annual minimum account balance
fee of $20 may apply to certain accounts with a value below the applicable share class’s initial minimum investment requirements to reduce the impact of small accounts on transfer agency fees. These minimum account balance fees are remitted to
the Fund and recorded as part of expense reductions in the Statement of Operations. For the year ended April 30, 2019, these minimum account balance fees reduced total expenses of the Fund by $40.
|
Columbia
Short Term Municipal Bond Fund | Annual Report 2019
|
35 |
Table of Contents
Notes to Financial Statements
(continued)
April 30, 2019
April 30, 2019
Distribution and service fees
The Fund has entered into an agreement with Columbia
Management Investment Distributors, Inc. (the Distributor), an affiliate of the Investment Manager and a wholly-owned subsidiary of Ameriprise Financial, for distribution and shareholder services. The Board of Trustees has approved, and the Fund has
adopted, distribution and shareholder service plans (the Plans) applicable to certain share classes, which set the distribution and service fees for the Fund. These fees are calculated daily and are intended to compensate the Distributor and/or
eligible selling and/or servicing agents for selling shares of the Fund and providing services to investors.
Under the Plans, the Fund pays a monthly combined distribution
and service fee to the Distributor at the maximum annual rate of 0.25% of the average daily net assets attributable to Class A shares of the Fund. Also under the Plans, the Fund pays a monthly service fee to the Distributor at the maximum annual
rate of 0.25% of the average daily net assets attributable to Class C shares of the Fund and a monthly distribution fee to the Distributor at the maximum annual rate of 0.75% of the average daily net assets attributable to Class C shares of the
Fund.
Sales charges (unaudited)
Sales charges, including front-end charges and CDSCs, received
by the Distributor for distributing Fund shares for the year ended April 30, 2019, if any, are listed below:
| Amount ($) | |
| Class A | 34,544 |
| Class C | 52 |
Expenses waived/reimbursed by the
Investment Manager and its affiliates
The Investment
Manager and certain of its affiliates have contractually agreed to waive fees and/or reimburse expenses (excluding certain fees and expenses described below) for the period(s) disclosed below, unless sooner terminated at the sole discretion of the
Board of Trustees, so that the Fund’s net operating expenses, after giving effect to fees waived/expenses reimbursed and any balance credits and/or overdraft charges from the Fund’s custodian, do not exceed the following annual rate(s)
as a percentage of the class’ average daily net assets:
Under the agreement governing
these fee waivers and/or expense reimbursement arrangements, the following fees and expenses are excluded from the waiver/reimbursement commitment, and therefore will be paid by the Fund, if applicable: taxes (including foreign transaction taxes),
expenses associated with investments in affiliated and non-affiliated pooled investment vehicles (including mutual funds and exchange-traded funds), transaction costs and brokerage commissions, costs related to any securities lending program,
dividend expenses associated with securities sold short, inverse floater program fees and expenses, transaction charges and interest on borrowed money, interest, infrequent and/or unusual expenses and any other expenses the exclusion of which is
specifically approved by the Board of Trustees. This agreement may be modified or amended only with approval from the Investment Manager, certain of its affiliates and the Fund. In addition to the contractual agreement, the Investment Manager and
certain of its affiliates have voluntarily agreed to waive fees and/or reimburse Fund expenses (excluding certain fees and expenses described above) so that Fund level expenses (expenses directly attributable to the Fund and not to a specific share
class) are waived proportionately across all share classes, but the Fund’s net operating expenses shall not exceed the contractual annual rates listed in the table above.
| 36 | Columbia Short Term Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Notes to Financial Statements
(continued)
April 30, 2019
April 30, 2019
This arrangement
may be revised or discontinued at any time. Any fees waived and/or expenses reimbursed under the expense reimbursement arrangements described above are not recoverable by the Investment Manager or its affiliates in future periods.
Note 4. Federal tax information
The timing and character of income and capital gain
distributions are determined in accordance with income tax regulations, which may differ from GAAP because of temporary or permanent book to tax differences.
At April 30, 2019, these differences were primarily due to
differing treatment for tax straddles, capital loss carryforwards, trustees’ deferred compensation and distributions. To the extent these differences were permanent, reclassifications were made among the components of the Fund’s net
assets. Temporary differences do not require reclassifications.
The Fund did not have any permanent differences; therefore, no
reclassifications were made.
The tax character of
distributions paid during the years indicated was as follows:
| Year Ended April 30, 2019 | Year Ended April 30, 2018 | ||||||
|
Ordinary
income ($) |
Tax-exempt
income ($) |
Long-term
capital gains ($) |
Total ($) |
Ordinary
income ($) |
Tax-exempt
income ($) |
Long-term
capital gains ($) |
Total ($) |
| — | 17,842,383 | — | 17,842,383 | — | 18,496,981 | — | 18,496,981 |
Short-term capital gain
distributions, if any, are considered ordinary income distributions for tax purposes.
At April 30, 2019, the components of distributable earnings on
a tax basis were as follows:
|
Undistributed
ordinary income ($) |
Undistributed
tax-
exempt income ($) |
Undistributed
long-term capital gains ($) |
Capital
loss
carryforwards ($) |
Net
unrealized
appreciation ($) |
| — | 1,895,240 | — | (5,647,653) | 1,451,655 |
At April 30, 2019, the cost of all
investments for federal income tax purposes along with the aggregate gross unrealized appreciation and depreciation based on that cost was:
|
Federal
tax cost ($) |
Gross
unrealized
appreciation ($) |
Gross
unrealized
(depreciation) ($) |
Net
unrealized
appreciation ($) |
| 875,377,873 | 3,498,750 | (2,047,095) | 1,451,655 |
Tax cost of investments and
unrealized appreciation/(depreciation) may also include timing differences that do not constitute adjustments to tax basis.
The following capital loss carryforwards, determined at April
30, 2019, may be available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code. Capital loss carryforwards with no expiration are required to be utilized prior
to any capital losses which carry an expiration date. As a result of this ordering rule, capital loss carryforwards which carry an expiration date may be more likely to expire unused. In addition, for the year ended April 30, 2019, capital loss
carryforwards utilized and expired unused, if any, were as follows:
|
No
expiration
short-term ($) |
No
expiration
long-term ($) |
Total ($) | Utilized ($) | Expired ($) |
| 718,691 | 4,928,962 | 5,647,653 | — | — |
Management of the Fund has
concluded that there are no significant uncertain tax positions in the Fund that would require recognition in the financial statements. However, management’s conclusion may be subject to review and adjustment at a later date based on factors
including, but not limited to, new tax laws, regulations, and administrative interpretations (including relevant court decisions). Generally, the Fund’s federal tax returns for the prior three fiscal years remain subject to examination by the
Internal Revenue Service.
|
Columbia
Short Term Municipal Bond Fund | Annual Report 2019
|
37 |
Table of Contents
Notes to Financial Statements
(continued)
April 30, 2019
April 30, 2019
Note 5. Portfolio information
The cost of purchases and proceeds from sales of securities,
excluding short-term investments and derivatives, if any, aggregated to $489,900,398 and $669,126,024, respectively, for the year ended April 30, 2019. The amount of purchase and sale activity impacts the portfolio turnover rate reported in the
Financial Highlights.
Note 6. Interfund
lending
Pursuant to an exemptive order granted by the
Securities and Exchange Commission, the Fund participates in a program (the Interfund Program) allowing each participating Columbia Fund (each, a Participating Fund) to lend money directly to and, except for closed-end funds and money market funds,
borrow money directly from other Participating Funds for temporary purposes. The amounts eligible for borrowing and lending under the Interfund Program are subject to certain restrictions.
Interfund loans are subject to the risk that the borrowing
fund could be unable to repay the loan when due, and a delay in repayment to the lending fund could result in lost opportunities and/or additional lending costs. The exemptive order is subject to conditions intended to mitigate conflicts of interest
arising from the Investment Manager’s relationship with each Participating Fund.
The Fund’s activity in the Interfund Program during the
year ended April 30, 2019 was as follows:
| Borrower or lender |
Average
loan
balance ($) |
Weighted
average
interest rate (%) |
Days
outstanding |
| Lender | 12,850,000 | 3.19 | 2 |
Interest income earned by the Fund
is recorded as Interfund lending in the Statement of Operations. The Fund had no outstanding interfund loans at April 30, 2019.
Note 7. Line of credit
The Fund has access to a revolving credit facility with a
syndicate of banks led by Citibank, N.A., HSBC Bank USA, N.A. and JPMorgan Chase Bank, N.A. whereby the Fund may borrow for the temporary funding of shareholder redemptions or for other temporary or emergency purposes. The credit facility, which is
a collective agreement between the Fund and certain other funds managed by the Investment Manager or an affiliated investment manager, severally and not jointly, permits collective borrowings up to $1 billion. Interest is charged to each
participating fund based on its borrowings at a rate equal to the higher of (i) the federal funds effective rate, (ii) the one-month LIBOR rate and (iii) the overnight bank funding rate, plus in each case, 1.00%. Each borrowing under the credit
facility matures no later than 60 days after the date of borrowing. The Fund also pays a commitment fee equal to its pro rata share of the unused amount of the credit facility at a rate of 0.15% per annum. The commitment fee is included in other
expenses in the Statement of Operations. This agreement expires annually in December unless extended or renewed.
The Fund had no borrowings during the year ended April 30,
2019.
Note 8. Significant risks
Credit risk
Credit risk is the risk that the value of debt securities in
the Fund’s portfolio may decline because the issuer may default and fail to pay interest or repay principal when due. Rating agencies assign credit ratings to debt securities to indicate their credit risk. Lower rated or unrated debt
securities held by the Fund may present increased credit risk as compared to higher-rated debt securities.
| 38 | Columbia Short Term Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Notes to Financial Statements
(continued)
April 30, 2019
April 30, 2019
New
York geographic concentration risk
To the extent that
the Fund concentrates its investments in the municipal securities issued by a particular state and political sub-divisions of the state, the Fund will be particularly affected by political and economic conditions and developments in such state in
which it invests. The Fund may, therefore, have a greater risk than that of a municipal bond fund which is more geographically diversified. The value of the municipal securities owned by the Fund also may be adversely affected by future changes in
federal or state income tax laws.
Interest rate risk
Interest rate risk is the risk of losses attributable to
changes in interest rates. In general, if prevailing interest rates rise, the values of debt securities tend to fall, and if interest rates fall, the values of debt securities tend to rise. Actions by governments and central banking authorities can
result in increases in interest rates. Increasing interest rates may negatively affect the value of debt securities held by the Fund, resulting in a negative impact on the Fund’s performance and net asset value per share. In general, the
longer the maturity or duration of a debt security, the greater its sensitivity to changes in interest rates.
Liquidity risk
Liquidity risk is the risk associated with a lack of
marketability of investments which may make it difficult to sell the investment at a desirable time or price. Changing regulatory, market or other conditions or environments (for example, the interest rate or credit environments) may adversely
affect the liquidity of the Fund’s investments. The Fund may have to accept a lower selling price for the holding, sell other investments, or forego another, more appealing investment opportunity. Generally, the less liquid the market at the
time the Fund sells a portfolio investment, the greater the risk of loss or decline of value to the Fund. A less liquid market can lead to an increase in Fund redemptions, which may negatively impact Fund performance and net asset value per share,
including, for example, if the Fund is forced to sell securities in a down market.
Municipal securities risk
Securities issued by a particular state and its
instrumentalities are subject to the risk of unfavorable developments in such state. A municipal security can be significantly affected by adverse tax, legislative, regulatory, demographic or political changes as well as changes in a particular
state’s (state and its instrumentalities’) financial, economic or other condition and prospects. Because the Fund invests significantly in municipal securities issued by the State of New York and its political sub-divisions, the Fund
will be particularly affected by any such changes in or otherwise impacting New York and its political sub-divisions.
Shareholder concentration risk
At April 30, 2019, one unaffiliated shareholder of record
owned 78.6% of the outstanding shares of the Fund in one or more accounts. The Fund has no knowledge about whether any portion of those shares was owned beneficially. Subscription and redemption activity by concentrated accounts may have a
significant effect on the operations of the Fund. In the case of a large redemption, the Fund may be forced to sell investments at inopportune times, including its liquid positions, which may result in Fund losses and the Fund holding a higher
percentage of less liquid positions. Large redemptions could result in decreased economies of scale and increased operating expenses for non-redeeming Fund shareholders.
Note 9. Subsequent events
Management has evaluated the events and transactions that
have occurred through the date the financial statements were issued and noted no items requiring adjustment of the financial statements or additional disclosure.
Note 10. Information regarding pending and settled
legal proceedings
Ameriprise Financial and certain of
its affiliates have historically been involved in a number of legal, arbitration and regulatory proceedings, including routine litigation, class actions, and governmental actions, concerning matters arising in connection with the conduct of their
business activities. Ameriprise Financial believes that the Fund is not currently the subject of, and that neither Ameriprise Financial nor any of its affiliates are the subject of, any pending legal, arbitration or regulatory proceedings that are
likely to have a material adverse effect on the Fund or the ability of Ameriprise Financial or its affiliates
|
Columbia
Short Term Municipal Bond Fund | Annual Report 2019
|
39 |
Table of Contents
Notes to Financial Statements
(continued)
April 30, 2019
April 30, 2019
to perform under
their contracts with the Fund. Ameriprise Financial is required to make quarterly (10-Q), annual (10-K) and, as necessary, 8-K filings with the Securities and Exchange Commission (SEC) on legal and regulatory matters that relate to Ameriprise
Financial and its affiliates. Copies of these filings may be obtained by accessing the SEC website at www.sec.gov.
There can be no assurance that these matters, or the adverse
publicity associated with them, will not result in increased Fund redemptions, reduced sale of Fund shares or other adverse consequences to the Fund. Further, although we believe proceedings are not likely to have a material adverse effect on the
Fund or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Fund, these proceedings are subject to uncertainties and, as such, we are unable to estimate the possible loss or range of loss that may result.
An adverse outcome in one or more of these proceedings could result in adverse judgments, settlements, fines, penalties or other relief that could have a material adverse effect on the consolidated financial condition or results of operations of
Ameriprise Financial.
| 40 | Columbia Short Term Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Report of Independent Registered Public Accounting Firm
To the
Board of Trustees of Columbia Funds Series Trust and Shareholders of Columbia Short Term Municipal Bond Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and
liabilities, including the portfolio of investments, of Columbia Short Term Municipal Bond Fund (one of the funds constituting Columbia Funds Series Trust, referred to hereafter as the "Fund") as of April 30, 2019, the related statement of
operations for the year ended April 30, 2019, the statement of changes in net assets for each of the two years in the period ended April 30, 2019, including the related notes, and the financial highlights for each of the periods indicated therein
(collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of April 30, 2019, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the period ended April 30, 2019 and the financial highlights for each of the periods indicated therein in conformity with accounting principles generally accepted in the
United States of America.
Basis for Opinion
These financial statements are the responsibility of the
Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB)
and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in
accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks
of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation
of securities owned as of April 30, 2019 by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our
opinion.
/s/PricewaterhouseCoopers LLP
Minneapolis, Minnesota
June 21, 2019
We have served as the auditor of one or more investment
companies within the Columbia Funds Complex since 1977.
|
Columbia
Short Term Municipal Bond Fund | Annual Report 2019
|
41 |
Table of Contents
Federal Income Tax Information
(Unaudited)
(Unaudited)
The Fund hereby designates the following tax attributes for
the fiscal year ended April 30, 2019. Shareholders will be notified in early 2020 of the amounts for use in preparing 2019 income tax returns.
|
Exempt-
interest dividends |
|
| 100.00% |
Exempt-interest dividends. The percentage of net investment
income distributed during the fiscal year that qualifies as exempt-interest dividends for federal income tax purposes. A portion of the income may be subject to federal alternative minimum tax.
| 42 | | Annual Report 2019 |
Table of Contents
TRUSTEES AND OFFICERS
The
Board oversees the Fund’s operations and appoints officers who are responsible for day-to-day business decisions based on policies set by the Board. The following table provides basic biographical information about the Fund’s Trustees as
of the printing of this report, including their principal occupations during the past five years, although specific titles for individuals may have varied over the period. Under current Board policy, Trustees not affiliated with the Investment
Manager generally may serve through the end of the calendar year in which they reach the mandatory retirement age established by the Board.
Independent trustees
|
Name,
address, year of birth |
Position
held
with the Trust and length of service |
Principal
occupation(s)
during past five years and other relevant professional experience |
Number
of
Funds in the Columbia Funds complex overseen |
Other
directorships
held by Trustee during the past five years |
|
George
S. Batejan
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1953 |
Trustee since 1/17 | Executive Vice President, Global Head of Technology and Operations, Janus Capital Group, Inc., 2010-2016 | 119 | Former Chairman of the Board, NICSA (National Investment Company Services Association) (Executive Committee, Nominating Committee and Governance Committee), 2014-2016; former Director, Intech Investment Management, 2011-2016; former Board Member, Metro Denver Chamber of Commerce, 2015-2016; former Advisory Board Member, University of Colorado Business School, 2015-2018 |
|
Kathleen
Blatz
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1954 |
Trustee since 1/06 for RiverSource Funds and since 6/11 for Nations Funds | Attorney; specializing in arbitration and mediation; Chief Justice, Minnesota Supreme Court, 1998-2006; Associate Justice, Minnesota Supreme Court, 1996-1998; Fourth Judicial District Court Judge, Hennepin County, 1994-1996; Attorney in private practice and public service, 1984-1993; State Representative, Minnesota House of Representatives, 1979-1993, which included service on the Tax and Financial Institutions and Insurance Committees; Member and Interim Chair, Minnesota Sports Facilities Authority, January 2017-July 2017; Interim President and Chief Executive Officer, Blue Cross and Blue Shield of Minnesota (health care insurance), February-July 2018 | 119 | Trustee, BlueCross BlueShield of Minnesota since 2009 (Chair of the Business Development Committee, 2014-2017; Chair of the Governance Committee since 2017); Chair of the Robina Foundation since August 2013; former Member and Chair of the Board, Minnesota Sports Facilities Authority, January 2017-July 2017 |
|
Edward
J. Boudreau, Jr.
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1944 |
Chair of the Board since 1/18; Trustee since 6/11 for RiverSource Funds and since 1/05 for Nations Funds | Managing Director, E.J. Boudreau & Associates (consulting) since 2000; FINRA Industry Arbitrator, 2002-present; Chairman and Chief Executive Officer, John Hancock Investments (asset management), Chairman and Interested Trustee for open-end and closed-end funds offered by John Hancock, 1989-2000; John Hancock Mutual Life Insurance Company, including Senior Vice President and Treasurer and Senior Vice President Information Technology, 1968-1988 | 119 | Former Trustee, Boston Museum of Science (Chair of Finance Committee) 1985-2013; former Trustee, BofA Funds Series Trust (11 funds), 2005-2011 |
|
Columbia
Short Term Municipal Bond Fund | Annual Report 2019
|
43 |
Table of Contents
TRUSTEES AND OFFICERS
(continued)
Independent trustees
(continued)
|
Name,
address, year of birth |
Position
held
with the Trust and length of service |
Principal
occupation(s)
during past five years and other relevant professional experience |
Number
of
Funds in the Columbia Funds complex overseen |
Other
directorships
held by Trustee during the past five years |
|
Pamela
G. Carlton
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1954 |
Trustee since 7/07 for RiverSource Funds and since 6/11 for Nations Funds | President, Springboard — Partners in Cross Cultural Leadership (consulting company) since 2003; Managing Director of US Equity Research, JP Morgan Chase, 1999-2003; Director of US Equity Research, Chase Asset Management, 1996-1999; Co-Director Latin America Research, 1993-1996, COO Global Research, 1992-1996, Co-Director of US Research, 1991-1992, Investment Banker, Morgan Stanley, 1982-1991 | 119 | Trustee, New York Presbyterian Hospital Board (Executive Committee and Chair of Human Resources Committee) since 1996; Director, Laurel Road Bank (Audit Committee) since 2017 |
|
Patricia
M. Flynn
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1950 |
Trustee since 11/04 for RiverSource Funds and since 6/11 for Nations Funds | Trustee Professor of Economics and Management, Bentley University since 1976 (also teaches and conducts research on corporate governance); Dean, McCallum Graduate School of Business, Bentley University, 1992-2002 | 119 | Trustee, MA Taxpayers Foundation since 1997; Board of Directors, The MA Business Roundtable since 2003; Board of Governors, Innovation Institute, MA Technology Collaborative since 2010 |
|
Brian
J. Gallagher
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1954 |
Trustee since 12/17 | Retired; Partner with Deloitte & Touche LLP and its predecessors, 1977-2016 | 117 | Trustee, Catholic Schools Foundation since 2004 |
|
Catherine
James Paglia
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1952 |
Trustee since 11/04 for RiverSource Funds and since 6/11 for Nations Funds | Director, Enterprise Asset Management, Inc. (private real estate and asset management company) since September 1998; Managing Director and Partner, Interlaken Capital, Inc., 1989-1997; Managing Director, Morgan Stanley, 1982-1989; Vice President, Investment Banking, 1980-1982, Associate, Investment Banking, 1976-1980, Dean Witter Reynolds, Inc. | 119 | Director, Valmont Industries, Inc. (irrigation systems manufacturer) since 2012; Trustee, Carleton College (on the Investment Committee); Trustee, Carnegie Endowment for International Peace (on the Investment Committee) |
|
Anthony
M. Santomero
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1946 |
Trustee since 6/11 for RiverSource Funds and since 1/08 for Nations Funds | Richard K. Mellon Professor Emeritus of Finance, The Wharton School, University of Pennsylvania, since 2002; Senior Advisor, McKinsey & Company (consulting), 2006-2008; President, Federal Reserve Bank of Philadelphia, 2000- 2006; Professor of Finance, The Wharton School, University of Pennsylvania, 1972-2002 | 119 | Trustee, Penn Mutual Life Insurance Company since March 2008; Director, Renaissance Reinsurance Ltd. since May 2008; former Trustee, BofA Funds Series Trust (11 funds), 2008-2011; former Director, Citigroup Inc. and Citibank, N.A., 2009-2019 |
| 44 | Columbia Short Term Municipal Bond Fund | Annual Report 2019 |
Table of Contents
TRUSTEES AND OFFICERS
(continued)
Independent trustees
(continued)
|
Name,
address, year of birth |
Position
held
with the Trust and length of service |
Principal
occupation(s)
during past five years and other relevant professional experience |
Number
of
Funds in the Columbia Funds complex overseen |
Other
directorships
held by Trustee during the past five years |
|
Minor
M. Shaw
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1947 |
Trustee since 6/11 for RiverSource Funds and since 2003 for Nations Funds | President, Micco LLC (private investments) since 2011; President, Micco Corp. (family investment business), 1998-2011 | 119 | Director, BlueCross BlueShield of South Carolina since April 2008; Board Chair, Hollingsworth Funds since 2016; Advisory Board member, Duke Energy Corp. since October 2016; Chair of the Duke Endowment; Chair of Greenville – Spartanburg Airport Commission; former Trustee, BofA Funds Series Trust (11 funds), 2003-2011; former Director, Piedmont Natural Gas, 2004-2016; former Director, National Association of Corporate Directors, Carolinas Chapter, 2013-2018 |
|
Sandra
Yeager
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1964 |
Trustee since 12/17 | Retired; President and founder, Hanoverian Capital, LLC (SEC registered investment advisor firm), 2008-2016; Managing Director, DuPont Capital, 2006-2008; Managing Director, Morgan Stanley Investment Management, 2004-2006; Senior Vice President, Alliance Bernstein, 1990-2004 | 117 | Director, NAPE Education Foundation since October 2016 |
Interested trustee affiliated with Investment
Manager*
|
Name,
address, year of birth |
Position held with the Trust and length of service |
Principal
occupation(s) during the
past five years and other relevant professional experience |
Number
of
Funds in the Columbia Funds complex overseen |
Other
directorships
held by Trustee during the past five years |
|
William
F. Truscott
c/o Columbia Management Investment Advisers, LLC 225 Franklin St. Boston, MA 02110 1960 |
Trustee since 11/01 for RiverSource Funds and since 6/11 for Nations Funds; Senior Vice President since 2002 for RiverSource Funds and since 5/10 for Nations Funds | Chairman of the Board and President, Columbia Management Investment Advisers, LLC since May 2010 and February 2012, respectively; Chief Executive Officer, Global Asset Management, Ameriprise Financial, Inc. since September 2012 (previously Chief Executive Officer, U.S. Asset Management & President, Annuities, May 2010 - September 2012); Director and Chief Executive Officer, Columbia Management Investment Distributors, Inc. since May 2010 and February 2012, respectively; Chairman of the Board and Chief Executive Officer, RiverSource Distributors, Inc. since 2006; Director, Threadneedle Asset Management Holdings, SARL since 2014; President and Chief Executive Officer, Ameriprise Certificate Company, 2006 - August 2012. | 188 | Chairman of the Board, Columbia Management Investment Advisers, LLC since May 2010; Director, Columbia Management Investment Distributors, Inc. since May 2010; former Director, Ameriprise Certificate Company, 2006-January 2013 |
| * | Interested person (as defined under the 1940 Act) by reason of being an officer, director, security holder and/or employee of the Investment Manager or Ameriprise Financial. |
|
Columbia
Short Term Municipal Bond Fund | Annual Report 2019
|
45 |
Table of Contents
TRUSTEES AND OFFICERS
(continued)
Nations Funds refer to the Funds within the Columbia Funds
Complex that historically bore the Nations brand and includes series of Columbia Funds Series Trust. RiverSource Funds refer to the Funds within the Columbia Funds Complex that historically bore the RiverSource brand and includes series of Columbia
Funds Series Trust II.
The Statement of Additional
Information has additional information about the Fund’s Board members and is available, without charge, upon request by calling 800.345.6611, visiting columbiathreadneedleus.com/investor/ or contacting your financial intermediary.
| 46 | Columbia Short Term Municipal Bond Fund | Annual Report 2019 |
Table of Contents
TRUSTEES AND OFFICERS
(continued)
The Board has appointed officers who are responsible for
day-to-day business decisions based on policies it has established. The officers serve at the pleasure of the Board. The following table provides basic information about the Officers of the Fund as of the printing of this report, including principal
occupations during the past five years, although their specific titles may have varied over the period. In addition to Mr. Truscott, who is Senior Vice President, the Fund’s other officers are:
Fund officers
|
Name,
address and year of birth |
Position
and year
first appointed to position for any Fund in the Columbia Funds complex or a predecessor thereof |
Principal occupation(s) during past five years |
|
Christopher
O. Petersen
5228 Ameriprise Financial Center Minneapolis, MN 55474 Born 1970 |
President and Principal Executive Officer (2015) | Vice President and Lead Chief Counsel, Ameriprise Financial, Inc. since January 2015 (previously Vice President and Chief Counsel, January 2010 - December 2014; officer of Columbia Funds and affiliated funds since 2007. |
|
Michael
G. Clarke
225 Franklin Street Boston, MA 02110 Born 1969 |
Chief Financial Officer (Principal Financial Officer) (2009) and Senior Vice President (2019) | Vice President, Head of North American Operations, and Co-Head of Global Operations, Columbia Management Investment Advisers, LLC, since June 2019 (previously Vice President – Accounting and Tax, May 2010 - May 2019); senior officer of Columbia Funds and affiliated funds since 2002 (previously Treasurer and Chief Accounting Officer, January 2009 - January 2019 and December 2015 - January 2019, respectively). |
|
Joseph
Beranek
5890 Ameriprise Financial Center Minneapolis, MN 55474 Born 1965 |
Treasurer and Chief Accounting Officer (Principal Accounting Officer) (2019) | Vice President — Mutual Fund Accounting and Financial Reporting, Columbia Management Investment Advisers, LLC, since December 2018 and March 2017, respectively (previously Vice President — Pricing and Corporate Actions, May 2010 - March 2017). |
|
Paul
B. Goucher
485 Lexington Avenue New York, NY 10017 Born 1968 |
Senior Vice President (2011) and Assistant Secretary (2008) | Senior Vice President and Assistant General Counsel, Ameriprise Financial, Inc. since January 2017 (previously Vice President and Lead Chief Counsel, November 2008 - January 2017 and January 2013 - January 2017, respectively); Vice President, Chief Legal Officer and Assistant Secretary, Columbia Management Investment Advisers, LLC since March 2015 (previously Vice President and Assistant Secretary, May 2010 – March 2015). |
|
Thomas
P. McGuire
225 Franklin Street Boston, MA 02110 Born 1972 |
Senior Vice President and Chief Compliance Officer (2012) | Vice President — Asset Management Compliance, Ameriprise Financial, Inc., since May 2010; Chief Compliance Officer, Ameriprise Certificate Company since September 2010. |
|
Colin
Moore
225 Franklin Street Boston, MA 02110 Born 1958 |
Senior Vice President (2010) | Executive Vice President and Global Chief Investment Officer, Ameriprise Financial, Inc., since July 2013; Executive Vice President and Global Chief Investment Officer, Columbia Management Investment Advisers, LLC since July 2013. |
|
Ryan
C. Larrenaga
225 Franklin Street Boston, MA 02110 Born 1970 |
Senior Vice President (2017), Chief Legal Officer (2017), and Secretary (2015) | Vice President and Chief Counsel, Ameriprise Financial, Inc. since August 2018 (previously Vice President and Group Counsel, August 2011 - August 2018); officer of Columbia Funds and affiliated funds since 2005. |
|
Michael
E. DeFao
225 Franklin Street Boston, MA 02110 Born 1968 |
Vice President (2011) and Assistant Secretary (2010) | Vice President and Chief Counsel, Ameriprise Financial, Inc. since May 2010. |
|
Lyn
Kephart-Strong
5228 Ameriprise Financial Center Minneapolis, MN 55474 Born 1960 |
Vice President (2015) | President, Columbia Management Investment Services Corp. since October 2014; Vice President & Resolution Officer, Ameriprise Trust Company since August 2009. |
|
Columbia
Short Term Municipal Bond Fund | Annual Report 2019
|
47 |
Table of Contents
Additional information
The
Fund mails one shareholder report to each shareholder address, unless such shareholder elected to receive shareholder reports from the Fund electronically. If you would like more than one report, please call shareholder services at 800.345.6611 and
additional reports will be sent to you.
Proxy voting
policies and procedures
The policy of the Board of
Trustees is to vote the proxies of the companies in which the Fund holds investments consistent with the procedures as stated in the Statement of Additional Information (SAI). You may obtain a copy of the SAI without charge by calling 800.345.6611;
contacting your financial intermediary; visiting columbiathreadneedleus.com/investor/; or searching the website of the Securities and Exchange Commission (SEC) at sec.gov. Information regarding how the Fund voted proxies relating to portfolio
securities is filed with the SEC by August 31st for the most recent 12-month period ending June 30th of that year, and is available without charge by visiting columbiathreadneedleus.com/investor/, or searching the website of the SEC at
sec.gov.
Quarterly schedule of investments
The Fund files a complete schedule of portfolio holdings
with the SEC for the first and third quarters of each fiscal year on Form N-Q or Form N-PORT (available for filings after March 31, 2019). The Fund’s Form N-Q or Form N-PORT is available on the SEC’s website at sec.gov. The Fund’s
complete schedule of portfolio holdings, as filed on Form N-Q or Form N-PORT, can also be obtained without charge, upon request, by calling 800.345.6611.
Additional Fund information
For more information about the Fund, please visit
columbiathreadneedleus.com/investor/ or call 800.345.6611. Customer Service Representatives are available to answer your questions Monday through Friday from 8 a.m. to 7 p.m. Eastern time.
Fund investment manager
Columbia Management Investment Advisers, LLC
225 Franklin Street
Boston, MA 02110
Fund distributor
Columbia Management Investment Distributors, Inc.
225 Franklin Street
Boston, MA 02110
Fund transfer agent
Columbia Management Investment Services Corp.
P.O. Box 219104
Kansas City, MO 64121-9104
| 48 | Columbia Short Term Municipal Bond Fund | Annual Report 2019 |
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Table of Contents
Columbia Short Term Municipal Bond Fund
P.O. Box 219104
Kansas City, MO 64121-9104
Please read and consider the investment objectives, risks,
charges and expenses for any fund carefully before investing. For a prospectus and summary prospectus, which contains this and other important information about the Fund, go to
columbiathreadneedleus.com/investor/ . The Fund is distributed by Columbia Management Investment Distributors, Inc., member FINRA, and managed by Columbia Management Investment Advisers, LLC.
columbiathreadneedleus.com/investor/ . The Fund is distributed by Columbia Management Investment Distributors, Inc., member FINRA, and managed by Columbia Management Investment Advisers, LLC.
Columbia Threadneedle Investments (Columbia Threadneedle) is
the global brand name of the Columbia and Threadneedle group of companies. All rights reserved.
© 2019 Columbia Management Investment Advisers, LLC.
columbiathreadneedleus.com/investor/
ANN223_04_J01_(06/19)
Table of Contents
Annual
Report
April 30, 2019
April 30, 2019
Columbia Virginia Intermediate Municipal Bond
Fund
(formerly Columbia AMT-Free Virginia
Intermediate Muni Bond Fund)
Beginning on January 1, 2021, as permitted by regulations
adopted by the Securities and Exchange Commission, paper copies of the Fund’s annual and semiannual shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the
reports will be made available on the Fund’s website (columbiathreadneedleus.com/investor/), and each time a report is posted you will be notified by mail and provided with a website address to access the report.
If you have already elected to receive shareholder reports
electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically at any time by contacting your financial intermediary (such
as a broker-dealer or bank) or, for Fund shares held directly with the Fund, by calling 800.345.6611 or by enrolling in “eDelivery” by logging into your account at columbiathreadneedleus.com/investor/.
You may elect to receive all future reports in paper free of
charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue receiving paper copies of your shareholder reports. If you invest directly with the Fund, you can call 800.345.6611 to
let the Fund know you wish to continue receiving paper copies of your shareholder reports. Your election to receive paper reports will apply to all Columbia Funds held in your account if you invest through a financial intermediary or all Columbia
Funds held with the fund complex if you invest directly with the Fund.
Not FDIC Insured • No bank guarantee • May lose
value
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Columbia Virginia Intermediate Municipal Bond
Fund | Annual Report 2019
Table of Contents
Fund at a Glance
Investment objective
Columbia Virginia Intermediate
Municipal Bond Fund (the Fund) seeks current income exempt from U.S. federal income tax and Virginia individual income tax, consistent with moderate fluctuation of principal.
Portfolio
management
Paul Fuchs,
CFA
Lead
Portfolio Manager
Managed Fund
since 2016
Anders Myhran,
CFA
Portfolio
Manager
Managed Fund
since May 2019
Deborah
Vargo
Portfolio
Manager
Managed Fund
since 2017
Returns for Class A shares are shown
with and without the maximum initial sales charge of 3.00%. Returns for Class C shares are shown with and without the 1.00% contingent deferred sales charge for the first year only. The Fund’s other share classes are not subject to sales
charges and have limited eligibility. Please see the Fund’s prospectus for details. Performance for different share classes will vary based on differences in sales charges and fees associated with each share class. All results shown assume
reinvestment of distributions during the period. Returns do not reflect the deduction of taxes that a shareholder may pay on Fund distributions or on the redemption of Fund shares. Performance results reflect the effect of any fee waivers or
reimbursements of Fund expenses by Columbia Management Investment Advisers, LLC and/or any of its affiliates. Absent these fee waivers or expense reimbursement arrangements, performance results would have been lower.
The performance information shown represents past performance and
is not a guarantee of future results. The investment return and principal value of your investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than
the performance information shown. You may obtain performance information current to the most recent month-end by contacting your financial intermediary, visiting columbiathreadneedleus.com/investor/ or calling 800.345.6611.
| * | The returns shown for periods prior to the share class inception date (including returns for the Life of the Fund, if shown, which are since Fund inception) include the returns of the Fund’s oldest share class. These returns are adjusted to reflect any higher class-related operating expenses of the newer share classes, as applicable. Please visit columbiathreadneedleus.com/investor/investment-products/mutual-funds/appended-performance for more information. |
The Bloomberg Barclays 3–15 Year Blend Municipal Bond
Index is an unmanaged index that tracks the performance of municipal bonds issued after December 31, 1990, with remaining maturities between 2 and 17 years and at least $7 million in principal amount outstanding.
Indices are not available for investment, are not
professionally managed and do not reflect sales charges, fees, brokerage commissions, taxes or other expenses of investing. Securities in the Fund may not match those in an index.
|
Columbia
Virginia Intermediate Municipal Bond Fund | Annual Report 2019
|
3 |
Table of Contents
Fund at a Glance
(continued)
Performance of a
hypothetical $10,000 investment (April 30, 2009 — April 30, 2019)
The chart above shows the
change in value of a hypothetical $10,000 investment in Class A shares of Columbia Virginia Intermediate Municipal Bond Fund during the stated time period, and does not reflect the deduction of taxes that a shareholder may pay on Fund distributions
or on the redemption of Fund shares.
| Quality breakdown (%) (at April 30, 2019) | |
| AAA rating | 11.8 |
| AA rating | 58.0 |
| A rating | 17.4 |
| BBB rating | 6.9 |
| B rating | 0.7 |
| Not rated | 5.2 |
| Total | 100.0 |
Percentages indicated are based
upon total fixed income investments.
Bond ratings apply
to the underlying holdings of the Fund and not the Fund itself and are divided into categories ranging from highest to lowest credit quality, determined by using the middle rating of Moody’s, S&P and Fitch, after dropping the highest and
lowest available ratings. When ratings are available from only two rating agencies, the lower rating is used. When a rating is available from only one rating agency, that rating is used. When a bond is not rated by any rating agency, it is
designated as “Not rated.” Credit quality ratings assigned by a rating agency are subjective opinions, not statements of fact, and are subject to change, including daily. The ratings assigned by credit rating agencies are but one of the
considerations that the Investment Manager and/or Fund’s subadviser incorporates into its credit analysis process, along with such other issuer-specific factors as cash flows, capital structure and leverage ratios, ability to de-leverage
(repay) through free cash flow, quality of management, market positioning and access to capital, as well as such security-specific factors as the terms of the security (e.g., interest rate and time to maturity) and the amount and type of any
collateral.
| 4 | Columbia Virginia Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Manager Discussion of Fund Performance
For
the 12-month period that ended April 30, 2019, the Fund’s Class A shares returned 4.69% excluding sales charges, and its Institutional shares returned 4.86%. The Fund’s benchmark, the Bloomberg Barclays 3-15 Year Blend Municipal Bond
Index, returned 5.91% for the same time period. Virginia municipals underperformed the national benchmark, largely as a result of their above-average credit quality.
Market overview
Municipal bonds generated healthy gains in the 12-month
reporting period, with the bulk of the rally occurring from November 2018 onward. Municipals performed reasonably well from May through August on the strength of falling U.S. Treasury yields and the combination of strong investor demand and reduced
new-issue supply in the tax-exempt market. Conditions became less favorable in September 2018, when U.S. Treasury yields climbed on indications of continued strength in the U.S. economy and fears about inflation pressures that could result from a
trade war with China. The negative trend persisted in October, as yields continued to rise on concerns that the U.S. Federal Reserve (Fed) would take a more aggressive approach to raising interest rates in 2019 than investors had been
expecting.
Sentiment again shifted abruptly in early
November, causing yields to fall sharply through the end of 2018. The fixed-income markets rallied significantly due to signs of slowing global growth, volatility in the higher risk assets, and expectations that the Fed would in fact adopt a more
accommodative stance. In addition, various geopolitical factors, including uncertainty surrounding the U.S.-China trade dispute, Brexit negotiations, and the U.S. government shutdown, fueled a “flight to quality” into bonds. Municipals
rallied as a result, helping the major national indexes finish 2018 in positive territory.
The rally continued into the New Year, leading to the largest
first-quarter gain for the tax-exempt market since 2014. The first quarter of 2019 was also the sixth-best for municipals in the past 30 years. During this time, bonds were well supported by the backdrop of slow global growth and the increasingly
accommodative policies of the world’s major central banks. Supply-and-demand factors also remained highly favorable. Municipals rallied further in April, helping them to post a solid gain for the full 12 months.
Longer term bonds outpaced shorter term issues in the period,
mirroring trends in the Treasury market, while lower quality bonds strongly outperformed their higher rated counterparts. The “risk-on” environment of January to April led to robust investor demand for higher risk assets, lifting the
returns of higher yielding bonds in all fixed-income categories.
Virginia’s municipal market underperformed
Virginia’s intermediate municipal market lagged the
broader U.S. indexes in the period. The state’s market was of a much higher quality level than the nation as a whole, with about 95% of its debt rated AAA and AA. This translated to both a smaller contribution from yield and less ability to
benefit from the outperformance of lower rated bonds.
The state’s economic fundamentals remained robust with
positive population growth, a falling unemployment rate, and personal income growth of about 4% annually. In addition, state revenues were up 3% year-over-year through the end of March. The state legislature amended the 2019/2020 biannual budget for
the 2020 fiscal year. Adjustments to the state tax code, which were made to conform to the Tax Cuts and Jobs Act, were expected to boost revenues by about $1.6 billion, but the legislature implemented about $1 billion in tax relief through an
increase in the standard deduction, an across-the-board tax refund, and other measures. The budget included about $1 billion in deposits to state reserves that would bring total reserves to $1.45 billion (approximately 6% of revenue) at the close of
fiscal year 2020. Market sentiment was also boosted by Amazon.com’s announcement that Arlington County would be home to one of the company’s two new headquarters, which should add about 25,000 jobs and result in the company investing
roughly $2.5 billion in the state.
Contributors and
detractors
The Fund’s overweight in 4% coupon
bonds, particularly local general obligation debt, was a strong contributor to performance. The bonds’ longer duration profile enabled them to outperform the national market during the strong rally that occurred from November through the end
of the period. (Duration is a measure of interest rate sensitivity). Emphasizing sub-5% coupons is one way we were able to embed additional yield into the portfolio despite the extremely high-quality profile of the Virginia municipal market.
|
Columbia
Virginia Intermediate Municipal Bond Fund | Annual Report 2019
|
5 |
Table of Contents
Manager Discussion of Fund Performance
(continued)
Bonds that we added to the portfolio from late October to
mid-December performed exceptionally well, as yields fell through the remainder of the period. The Fund’s holdings in bonds issued by correctional facilities also added value.
Positions in pre-refunded securities, hospitals, and
pooled/bank water-related sectors detracted from performance. Pre-refunded securities underperformed because of their high credit quality, short maturities, and low yields, while hospitals lagged due to modestly shorter duration and maturity
profiles than their benchmark counterparts. Lastly, the shortfall in the pooled/bank sector reflected our decision to sell some positions early in the period prior to the strong second-half rally.
Fund positioning
At the close of the period, we were fairly comfortable with
the overall interest rate environment due to the combination of muted inflation, the late stage of the economic expansion, and the Fed’s signals that it intends to remain on hold through the end of 2019. In addition, ongoing geopolitical
issues, including trade negotiations with China, Brexit uncertainty, and Washington infighting, continued to put downward pressure on interest rates. With this as the backdrop, we favored opportunities on the longer end of the intermediate-term
range due to their higher income. The Fund’s quality profile was neutral relative to the benchmark, but we remained on the lookout for opportunities to add lower rated, investment-grade bonds. The Fund continued to have meaningful weighting in
the transportation, hospital, and local general obligation sectors.
Fixed-income securities present
issuer
default risk. The Fund invests substantially in
municipal securities
and will be affected by tax, legislative, regulatory, demographic or political changes, as well
as changes impacting a state’s financial, economic or other conditions. A relatively small number of tax-exempt issuers may necessitate the Fund investing more heavily in a single issuer and, therefore, be more exposed to the risk of loss than
a fund that invests more broadly. The value of the Fund’s portfolio may be more volatile than a more
geographically diversified
fund.
Prepayment and extension
risk
exists because the timing of payments on a loan, bond or other investment may accelerate when interest rates fall or decelerate when interest rates rise which may reduce investment opportunities and potential returns. A rise in
interest rates
may result in a price decline of fixed-income instruments held by the Fund, negatively impacting its performance and NAV. Falling rates may result in the Fund investing in lower yielding debt
instruments, lowering the Fund’s income and yield. These risks may be heightened for longer maturity and duration securities.
Non-investment-grade
(high-yield or junk) securities present greater price
volatility and more risk to principal and income than higher rated securities.
Market
risk may affect a single issuer, sector of the economy, industry or the market as a whole. Federal and state
tax
rules apply to capital gain distributions and any gains or losses on sales. Income may be subject to state or local taxes.
Liquidity
risk is associated with the difficulty
of selling underlying investments at a desirable time or price. See the Fund’s prospectus for more information on these and other risks.
The views expressed in this report reflect the current views of
the respective parties. These views are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict, so actual outcomes and results may differ significantly from the views expressed.
These views are subject to change at any time based upon economic, market or other conditions and the respective parties disclaim any responsibility to update such views. These views may not be relied on as investment advice and, because investment
decisions for a Columbia fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any particular Columbia fund. References to specific securities should not be construed as a recommendation or
investment advice.
| 6 | Columbia Virginia Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Understanding Your Fund’s Expenses
(Unaudited)
(Unaudited)
As an investor, you incur two types of costs. There are
shareholder transaction costs, which generally include sales charges on purchases and may include redemption fees. There are also ongoing fund costs, which generally include management fees, distribution and/or service fees, and other fund expenses.
The following information is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to help you compare these costs with the ongoing costs of investing in other mutual funds.
Analyzing your Fund’s expenses
To illustrate these ongoing costs, we have provided examples
and calculated the expenses paid by investors in each share class of the Fund during the period. The actual and hypothetical information in the table is based on an initial investment of $1,000 at the beginning of the period indicated and held for
the entire period. Expense information is calculated two ways and each method provides you with different information. The amount listed in the “Actual” column is calculated using the Fund’s actual operating expenses and total
return for the period. You may use the Actual information, together with the amount invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000
= 8.6), then multiply the results by the expenses paid during the period under the “Actual” column. The amount listed in the “Hypothetical” column assumes a 5% annual rate of return before expenses (which is not the
Fund’s actual return) and then applies the Fund’s actual expense ratio for the period to the hypothetical return. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end
of the period or the expenses you paid during the period. See “Compare with other funds” below for details on how to use the hypothetical data.
Compare with other funds
Since all mutual funds are required to include the same
hypothetical calculations about expenses in shareholder reports, you can use this information to compare the ongoing cost of investing in the Fund with other funds. To do so, compare the hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of other funds. As you compare hypothetical examples of other funds, it is important to note that hypothetical examples are meant to highlight the ongoing costs of investing in a fund only and do not reflect any
transaction costs, such as sales charges, or redemption or exchange fees. Therefore, the hypothetical calculations are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. If
transaction costs were included in these calculations, your costs would be higher.
Expenses paid during the period
are equal to the annualized expense ratio for each class as indicated above, multiplied by the average account value over the period and then multiplied by the number of days in the Fund’s most recent fiscal half year and divided by 365.
Expenses do not include fees and expenses incurred indirectly
by the Fund from its investment in underlying funds, including affiliated and non-affiliated pooled investment vehicles, such as mutual funds and exchange-traded funds.
Had Columbia Management Investment Advisers, LLC and/or certain
of its affiliates not waived/reimbursed certain fees and expenses, account value at the end of the period would have been reduced.
|
Columbia
Virginia Intermediate Municipal Bond Fund | Annual Report 2019
|
7 |
Table of Contents
Portfolio of Investments
April 30, 2019
April 30, 2019
(Percentages represent value of investments compared to net
assets)
Investments in securities
The accompanying Notes to Financial Statements are an integral part
of this statement.
| 8 | Columbia Virginia Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Portfolio of Investments
(continued)
April 30, 2019
April 30, 2019
The accompanying Notes to Financial Statements are an integral part
of this statement.
|
Columbia
Virginia Intermediate Municipal Bond Fund | Annual Report 2019
|
9 |
Table of Contents
The accompanying Notes to Financial Statements are an integral part
of this statement.
| 10 | Columbia Virginia Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Portfolio of Investments
(continued)
April 30, 2019
April 30, 2019
| Money Market Funds 0.8% | ||
| Shares | Value ($) | |
| Dreyfus Tax-Exempt Cash Management Fund, Institutional Shares, 1.981% (f) | 1,004,827 | 1,004,827 |
|
Total
Money Market Funds
(Cost $1,004,827) |
1,004,827 | |
|
Total
Investments in Securities
(Cost: $133,380,857) |
137,438,398 | |
| Other Assets & Liabilities, Net | 446,870 | |
| Net Assets | 137,885,268 | |
The accompanying Notes to Financial Statements are an integral part
of this statement.
|
Columbia
Virginia Intermediate Municipal Bond Fund | Annual Report 2019
|
11 |
Table of Contents
Portfolio of Investments
(continued)
April 30, 2019
April 30, 2019
Notes to Portfolio of Investments
| (a) | The Fund is entitled to receive principal and interest from the guarantor after a day or a week’s notice or upon maturity. The maturity date disclosed represents the final maturity. |
| (b) | Represents a variable rate security where the coupon rate adjusts on specified dates (generally daily or weekly) using the prevailing money market rate. The interest rate shown was the current rate as of April 30, 2019. |
| (c) | Represents privately placed and other securities and instruments exempt from Securities and Exchange Commission registration (collectively, private placements), such as Section 4(a)(2) and Rule 144A eligible securities, which are often sold only to qualified institutional buyers. The Fund may invest in private placements determined to be liquid as well as those determined to be illiquid. Private placements may be determined to be liquid under guidelines established by the Fund’s Board of Trustees. At April 30, 2019, the total value of these securities amounted to $461,201, which represents 0.33% of total net assets. |
| (d) | Zero coupon bond. |
| (e) | Represents a security purchased on a when-issued basis. |
| (f) | The rate shown is the seven-day current annualized yield at April 30, 2019. |
Abbreviation Legend
| AGM | Assured Guaranty Municipal Corporation |
| NPFGC | National Public Finance Guarantee Corporation |
Fair value measurements
The Fund categorizes its fair value measurements according to
a three-level hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs by prioritizing that the most observable input be used when available. Observable inputs are those that market participants would use in
pricing an investment based on market data obtained from sources independent of the reporting entity. Unobservable inputs are those that reflect the Fund’s assumptions about the information market participants would use in pricing an
investment. An investment’s level within the fair value hierarchy is based on the lowest level of any input that is deemed significant to the asset’s or liability’s fair value measurement. The input levels are not necessarily an
indication of the risk or liquidity associated with investments at that level. For example, certain U.S. government securities are generally high quality and liquid, however, they are reflected as Level 2 because the inputs used to determine fair
value may not always be quoted prices in an active market.
Fair value inputs are summarized in the three broad levels
listed below:
| ■ | Level 1 — Valuations based on quoted prices for investments in active markets that the Fund has the ability to access at the measurement date. Valuation adjustments are not applied to Level 1 investments. |
| ■ | Level 2 — Valuations based on other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risks, etc.). |
| ■ | Level 3 — Valuations based on significant unobservable inputs (including the Fund’s own assumptions and judgment in determining the fair value of investments). |
Inputs that are used in determining fair value of an investment
may include price information, credit data, volatility statistics, and other factors. These inputs can be either observable or unobservable. The availability of observable inputs can vary between investments, and is affected by various factors such
as the type of investment, and the volume and level of activity for that investment or similar investments in the marketplace. The inputs will be considered by the Investment Manager, along with any other relevant factors in the calculation of an
investment’s fair value. The Fund uses prices and inputs that are current as of the measurement date, which may include periods of market dislocations. During these periods, the availability of prices and inputs may be reduced for many
investments. This condition could cause an investment to be reclassified between the various levels within the hierarchy.
Investments falling into the Level 3 category are primarily
supported by quoted prices from brokers and dealers participating in the market for those investments. However, these may be classified as Level 3 investments due to lack of market transparency and corroboration to support these quoted prices.
Additionally, valuation models may be used as the pricing source for any remaining investments classified as Level 3. These models may rely on one or more significant unobservable inputs and/or significant assumptions by the Investment Manager.
Inputs used in valuations may include, but are not limited to, financial statement analysis, capital account balances, discount rates and estimated cash flows, and comparable company data.
Under the direction of the Fund’s Board of Trustees (the
Board), the Investment Manager’s Valuation Committee (the Committee) is responsible for overseeing the valuation procedures approved by the Board. The Committee consists of voting and non-voting members from various groups within the
Investment Manager’s organization, including operations and accounting, trading and investments, compliance, risk management and legal.
The Committee meets at least monthly to review and approve
valuation matters, which may include a description of specific valuation determinations, data regarding pricing information received from approved pricing vendors and brokers and the results of Board-approved valuation control policies and
procedures (the Policies). The Policies address, among other things, instances when market quotations are or are not readily available, including recommendations of third party pricing vendors and a determination of appropriate pricing
methodologies; events that require specific valuation determinations and assessment of fair value techniques; securities with a potential for stale pricing, including those that are illiquid, restricted, or in default; and the effectiveness of third
party pricing vendors, including periodic reviews of vendors. The Committee meets more frequently, as needed, to discuss additional valuation matters, which may include the need to review back-testing results, review time-sensitive information or
approve related valuation actions. The Committee reports to the Board, with members of the Committee meeting with the Board at each of its regularly scheduled meetings to discuss valuation matters and actions during the period, similar to those
described earlier.
For investments categorized as Level
3, the Committee monitors information similar to that described above, which may include: (i) data specific to the issuer or comparable issuers, (ii) general market or specific sector news and (iii) quoted prices and specific or similar security
transactions. The Committee considers this data and any changes from prior periods in order to assess the reasonableness of observable and unobservable inputs, any assumptions or internal models used to value those securities and changes in fair
value. This data is also used to corroborate, when available, information received from approved pricing vendors and brokers. Various factors impact the frequency of monitoring this information (which may occur as often as daily). However, the
Committee may determine that changes to inputs, assumptions and models are not required as a result of the monitoring procedures performed.
The accompanying Notes to Financial Statements are an integral part of this
statement.
| 12 | Columbia Virginia Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Portfolio of Investments
(continued)
April 30, 2019
April 30, 2019
Fair value
measurements
(continued)
The following table is a summary of the inputs used to value the Fund’s investments at April 30, 2019:
The following table is a summary of the inputs used to value the Fund’s investments at April 30, 2019:
|
Level
1
quoted prices in active markets for identical assets ($) |
Level
2
other significant observable inputs ($) |
Level
3
significant unobservable inputs ($) |
Total ($) | |
| Investments in Securities | ||||
| Floating Rate Notes | — | 1,000,000 | — | 1,000,000 |
| Municipal Bonds | — | 135,433,571 | — | 135,433,571 |
| Money Market Funds | 1,004,827 | — | — | 1,004,827 |
| Total Investments in Securities | 1,004,827 | 136,433,571 | — | 137,438,398 |
See the Portfolio of Investments for
all investment classifications not indicated in the table.
The Fund’s assets assigned to the Level 2 input category
are generally valued using the market approach, in which a security’s value is determined through reference to prices and information from market transactions for similar or identical assets.
There were no transfers of financial assets between levels
during the period.
The accompanying Notes to Financial Statements are an integral part of this
statement.
|
Columbia
Virginia Intermediate Municipal Bond Fund | Annual Report 2019
|
13 |
Table of Contents
Statement of Assets and Liabilities
April 30, 2019
April 30, 2019
| Assets | |
| Investments in securities, at value | |
| Unaffiliated issuers (cost $133,380,857) | $137,438,398 |
| Cash | 385,568 |
| Receivable for: | |
| Capital shares sold | 440,750 |
| Interest | 1,593,000 |
| Expense reimbursement due from Investment Manager | 264 |
| Prepaid expenses | 606 |
| Total assets | 139,858,586 |
| Liabilities | |
| Payable for: | |
| Investments purchased on a delayed delivery basis | 1,248,010 |
| Capital shares purchased | 230,110 |
| Distributions to shareholders | 331,360 |
| Management services fees | 1,772 |
| Distribution and/or service fees | 239 |
| Transfer agent fees | 5,328 |
| Compensation of board members | 116,568 |
| Other expenses | 39,931 |
| Total liabilities | 1,973,318 |
| Net assets applicable to outstanding capital stock | $137,885,268 |
| Represented by | |
| Paid in capital | 133,984,610 |
| Total distributable earnings (loss) (Note 2) | 3,900,658 |
| Total - representing net assets applicable to outstanding capital stock | $137,885,268 |
| Class A | |
| Net assets | $23,706,050 |
| Shares outstanding | 2,247,995 |
| Net asset value per share | $10.55 |
| Maximum sales charge | 3.00% |
| Maximum offering price per share (calculated by dividing the net asset value per share by 1.0 minus the maximum sales charge for Class A shares) | $10.88 |
| Advisor Class | |
| Net assets | $273,750 |
| Shares outstanding | 25,954 |
| Net asset value per share | $10.55 |
| Class C | |
| Net assets | $2,785,644 |
| Shares outstanding | 263,945 |
| Net asset value per share | $10.55 |
| Institutional Class | |
| Net assets | $22,698,447 |
| Shares outstanding | 2,152,891 |
| Net asset value per share | $10.54 |
| Institutional 3 Class | |
| Net assets | $88,421,377 |
| Shares outstanding | 8,365,922 |
| Net asset value per share | $10.57 |
The accompanying Notes to Financial Statements are an integral part of this
statement.
| 14 | Columbia Virginia Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Statement of Operations
Year Ended April 30, 2019
Year Ended April 30, 2019
| Net investment income | |
| Income: | |
| Dividends — unaffiliated issuers | $4,827 |
| Interest | 5,146,004 |
| Total income | 5,150,831 |
| Expenses: | |
| Management services fees | 703,417 |
| Distribution and/or service fees | |
| Class A | 63,777 |
| Class C | 32,468 |
| Transfer agent fees | |
| Class A | 24,937 |
| Advisor Class | 1,465 |
| Class C | 3,172 |
| Institutional Class | 24,080 |
| Institutional 3 Class | 6,957 |
| Compensation of board members | 16,013 |
| Custodian fees | 1,927 |
| Printing and postage fees | 12,112 |
| Registration fees | 9,879 |
| Audit fees | 33,900 |
| Legal fees | 8,185 |
| Compensation of chief compliance officer | 33 |
| Other | 10,588 |
| Total expenses | 952,910 |
| Fees waived or expenses reimbursed by Investment Manager and its affiliates | (103,613) |
| Expense reduction | (20) |
| Total net expenses | 849,277 |
| Net investment income | 4,301,554 |
| Realized and unrealized gain (loss) — net | |
| Net realized gain (loss) on: | |
| Investments — unaffiliated issuers | 461,192 |
| Net realized gain | 461,192 |
| Net change in unrealized appreciation (depreciation) on: | |
| Investments — unaffiliated issuers | 2,118,163 |
| Net change in unrealized appreciation (depreciation) | 2,118,163 |
| Net realized and unrealized gain | 2,579,355 |
| Net increase in net assets resulting from operations | $6,880,909 |
The accompanying Notes to Financial Statements are an
integral part of this statement.
|
Columbia
Virginia Intermediate Municipal Bond Fund | Annual Report 2019
|
15 |
Table of Contents
Statement of Changes in Net Assets
|
Year
Ended
April 30, 2019 |
Year
Ended
April 30, 2018 |
|
| Operations | ||
| Net investment income | $4,301,554 | $5,146,836 |
| Net realized gain | 461,192 | 1,166,822 |
| Net change in unrealized appreciation (depreciation) | 2,118,163 | (6,380,720) |
| Net increase (decrease) in net assets resulting from operations | 6,880,909 | (67,062) |
| Distributions to shareholders | ||
| Net investment income and net realized gains | ||
| Class A | (892,767) | |
| Advisor Class | (58,206) | |
| Class C | (87,303) | |
| Institutional Class | (921,381) | |
| Institutional 3 Class | (3,674,814) | |
| Net investment income | ||
| Class A | (739,090) | |
| Advisor Class | (48,373) | |
| Class B | (47) | |
| Class C | (82,833) | |
| Institutional Class | (2,041,523) | |
| Institutional 3 Class | (2,354,809) | |
| Net realized gains | ||
| Class A | (78,523) | |
| Advisor Class | (5,862) | |
| Class C | (12,565) | |
| Institutional Class | (93,227) | |
| Institutional 3 Class | (313,338) | |
| Total distributions to shareholders (Note 2) | (5,634,471) | (5,770,190) |
| Decrease in net assets from capital stock activity | (27,282,627) | (26,032,570) |
| Total decrease in net assets | (26,036,189) | (31,869,822) |
| Net assets at beginning of year | 163,921,457 | 195,791,279 |
| Net assets at end of year | $137,885,268 | $163,921,457 |
| Undistributed (excess of distributions over) net investment income | $(90,433) | $122,052 |
The accompanying Notes to Financial Statements are an
integral part of this statement.
| 16 | Columbia Virginia Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Statement of Changes in Net Assets
(continued)
| Year Ended | Year Ended | |||
| April 30, 2019 | April 30, 2018 | |||
| Shares | Dollars ($) | Shares | Dollars ($) | |
| Capital stock activity | ||||
| Class A | ||||
| Subscriptions | 210,015 | 2,191,456 | 414,444 | 4,441,045 |
| Distributions reinvested | 49,361 | 513,621 | 44,301 | 473,707 |
| Redemptions | (598,724) | (6,209,541) | (481,634) | (5,156,319) |
| Net decrease | (339,348) | (3,504,464) | (22,889) | (241,567) |
| Advisor Class | ||||
| Subscriptions | 13,021 | 136,213 | 150,640 | 1,624,026 |
| Distributions reinvested | 5,563 | 57,838 | 5,035 | 53,729 |
| Redemptions | (167,258) | (1,751,805) | (56,357) | (596,030) |
| Net increase (decrease) | (148,674) | (1,557,754) | 99,318 | 1,081,725 |
| Class B | ||||
| Redemptions | — | — | (904) | (9,878) |
| Net decrease | — | — | (904) | (9,878) |
| Class C | ||||
| Subscriptions | 35,389 | 369,924 | 76,389 | 821,561 |
| Distributions reinvested | 7,457 | 77,614 | 7,590 | 81,268 |
| Redemptions | (144,956) | (1,504,859) | (175,272) | (1,881,579) |
| Net decrease | (102,110) | (1,057,321) | (91,293) | (978,750) |
| Institutional Class | ||||
| Subscriptions | 271,829 | 2,831,932 | 795,350 | 8,556,321 |
| Distributions reinvested | 69,807 | 726,441 | 72,645 | 777,323 |
| Redemptions | (986,787) | (10,268,044) | (13,068,801) | (141,811,119) |
| Net decrease | (645,151) | (6,709,671) | (12,200,806) | (132,477,475) |
| Institutional 3 Class | ||||
| Subscriptions | 1,793,759 | 18,748,298 | 12,736,917 | 138,439,858 |
| Distributions reinvested | 9,905 | 103,267 | 5,105 | 54,205 |
| Redemptions | (3,194,814) | (33,304,982) | (2,985,880) | (31,900,688) |
| Net increase (decrease) | (1,391,150) | (14,453,417) | 9,756,142 | 106,593,375 |
| Total net decrease | (2,626,433) | (27,282,627) | (2,460,432) | (26,032,570) |
The accompanying Notes to Financial Statements are an integral part of this
statement.
|
Columbia
Virginia Intermediate Municipal Bond Fund | Annual Report 2019
|
17 |
Table of Contents
Financial Highlights
The
following table is intended to help you understand the Fund’s financial performance. Certain information reflects financial results for a single share of a class held for the periods shown. Per share net investment income (loss) amounts are
calculated based on average shares outstanding during the period. Total return assumes reinvestment of all dividends and distributions, if any. Total return does not reflect payment of sales charges, if any. Total return and portfolio turnover are
not annualized for periods of less than one year. The portfolio turnover rate is calculated without regard to purchase and sales transactions of short-term instruments and certain derivatives, if any. If such transactions were included, the
Fund’s portfolio turnover rate may be higher.
|
Net
asset value,
beginning of period |
Net
investment income |
Net
realized and unrealized gain (loss) |
Total
from
investment operations |
Distributions
from net investment income |
Distributions
from net realized gains |
Total
distributions to shareholders |
|
| Class A | |||||||
| Year Ended 4/30/2019 | $10.44 | 0.27 | 0.21 | 0.48 | (0.29) | (0.08) | (0.37) |
| Year Ended 4/30/2018 | $10.79 | 0.27 | (0.31) | (0.04) | (0.28) | (0.03) | (0.31) |
| Year Ended 4/30/2017 | $11.18 | 0.28 | (0.34) | (0.06) | (0.30) | (0.03) | (0.33) |
| Year Ended 4/30/2016 | $11.13 | 0.30 | 0.10 | 0.40 | (0.32) | (0.03) | (0.35) |
| Year Ended 4/30/2015 | $11.09 | 0.31 | 0.04 | 0.35 | (0.31) | (0.00) (d) | (0.31) |
| Advisor Class | |||||||
| Year Ended 4/30/2019 | $10.44 | 0.30 | 0.20 | 0.50 | (0.31) | (0.08) | (0.39) |
| Year Ended 4/30/2018 | $10.79 | 0.30 | (0.31) | (0.01) | (0.31) | (0.03) | (0.34) |
| Year Ended 4/30/2017 | $11.18 | 0.31 | (0.34) | (0.03) | (0.33) | (0.03) | (0.36) |
| Year Ended 4/30/2016 | $11.12 | 0.33 | 0.11 | 0.44 | (0.35) | (0.03) | (0.38) |
| Year Ended 4/30/2015 | $11.08 | 0.34 | 0.04 | 0.38 | (0.34) | (0.00) (d) | (0.34) |
| Class C | |||||||
| Year Ended 4/30/2019 | $10.45 | 0.20 | 0.19 | 0.39 | (0.21) | (0.08) | (0.29) |
| Year Ended 4/30/2018 | $10.80 | 0.19 | (0.31) | (0.12) | (0.20) | (0.03) | (0.23) |
| Year Ended 4/30/2017 | $11.19 | 0.20 | (0.34) | (0.14) | (0.22) | (0.03) | (0.25) |
| Year Ended 4/30/2016 | $11.13 | 0.22 | 0.10 | 0.32 | (0.23) | (0.03) | (0.26) |
| Year Ended 4/30/2015 | $11.10 | 0.23 | 0.03 | 0.26 | (0.23) | (0.00) (d) | (0.23) |
| Institutional Class | |||||||
| Year Ended 4/30/2019 | $10.44 | 0.30 | 0.20 | 0.50 | (0.32) | (0.08) | (0.40) |
| Year Ended 4/30/2018 | $10.79 | 0.30 | (0.31) | (0.01) | (0.31) | (0.03) | (0.34) |
| Year Ended 4/30/2017 | $11.18 | 0.31 | (0.34) | (0.03) | (0.33) | (0.03) | (0.36) |
| Year Ended 4/30/2016 | $11.13 | 0.33 | 0.10 | 0.43 | (0.35) | (0.03) | (0.38) |
| Year Ended 4/30/2015 | $11.09 | 0.34 | 0.04 | 0.38 | (0.34) | (0.00) (d) | (0.34) |
The accompanying Notes to Financial Statements are an
integral part of this statement.
| 18 | Columbia Virginia Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Financial Highlights
(continued)
|
Net
asset value, end of period |
Total
return |
Total
gross
expense ratio to average net assets (a) |
Total
net
expense ratio to average net assets (a),(b) |
Net
investment
income ratio to average net assets |
Portfolio
turnover |
Net
assets, end of period (000’s) |
|
| Class A | |||||||
| Year Ended 4/30/2019 | $10.55 | 4.69% | 0.88% | 0.81% (c) | 2.63% | 13% | $23,706 |
| Year Ended 4/30/2018 | $10.44 | (0.39%) | 0.89% | 0.81% (c) | 2.55% | 14% | $27,005 |
| Year Ended 4/30/2017 | $10.79 | (0.51%) | 0.95% | 0.81% | 2.56% | 7% | $28,168 |
| Year Ended 4/30/2016 | $11.18 | 3.65% | 0.96% | 0.81% (c) | 2.72% | 12% | $42,046 |
| Year Ended 4/30/2015 | $11.13 | 3.21% | 0.97% | 0.81% (c) | 2.79% | 9% | $47,324 |
| Advisor Class | |||||||
| Year Ended 4/30/2019 | $10.55 | 4.95% | 0.63% | 0.56% (c) | 2.87% | 13% | $274 |
| Year Ended 4/30/2018 | $10.44 | (0.14%) | 0.63% | 0.56% (c) | 2.80% | 14% | $1,823 |
| Year Ended 4/30/2017 | $10.79 | (0.26%) | 0.70% | 0.56% | 2.81% | 7% | $812 |
| Year Ended 4/30/2016 | $11.18 | 4.00% | 0.72% | 0.56% (c) | 2.97% | 12% | $506 |
| Year Ended 4/30/2015 | $11.12 | 3.47% | 0.72% | 0.56% (c) | 3.06% | 9% | $656 |
| Class C | |||||||
| Year Ended 4/30/2019 | $10.55 | 3.81% | 1.63% | 1.56% (c) | 1.88% | 13% | $2,786 |
| Year Ended 4/30/2018 | $10.45 | (1.13%) | 1.64% | 1.56% (c) | 1.79% | 14% | $3,824 |
| Year Ended 4/30/2017 | $10.80 | (1.25%) | 1.70% | 1.56% | 1.82% | 7% | $4,938 |
| Year Ended 4/30/2016 | $11.19 | 2.97% | 1.72% | 1.56% (c) | 1.97% | 12% | $5,141 |
| Year Ended 4/30/2015 | $11.13 | 2.35% | 1.72% | 1.56% (c) | 2.03% | 9% | $4,419 |
| Institutional Class | |||||||
| Year Ended 4/30/2019 | $10.54 | 4.86% | 0.63% | 0.56% (c) | 2.88% | 13% | $22,698 |
| Year Ended 4/30/2018 | $10.44 | (0.15%) | 0.65% | 0.56% (c) | 2.76% | 14% | $29,199 |
| Year Ended 4/30/2017 | $10.79 | (0.26%) | 0.70% | 0.56% | 2.82% | 7% | $161,853 |
| Year Ended 4/30/2016 | $11.18 | 3.91% | 0.71% | 0.56% (c) | 2.97% | 12% | $173,677 |
| Year Ended 4/30/2015 | $11.13 | 3.47% | 0.72% | 0.56% (c) | 3.04% | 9% | $171,775 |
The accompanying Notes to Financial Statements are an
integral part of this statement.
|
Columbia
Virginia Intermediate Municipal Bond Fund | Annual Report 2019
|
19 |
Table of Contents
Financial Highlights
(continued)
|
Net
asset value,
beginning of period |
Net
investment income |
Net
realized and unrealized gain (loss) |
Total
from
investment operations |
Distributions
from net investment income |
Distributions
from net realized gains |
Total
distributions to shareholders |
|
| Institutional 3 Class | |||||||
| Year Ended 4/30/2019 | $10.46 | 0.31 | 0.21 | 0.52 | (0.33) | (0.08) | (0.41) |
| Year Ended 4/30/2018 | $10.82 | 0.31 | (0.32) | (0.01) | (0.32) | (0.03) | (0.35) |
| Year Ended 4/30/2017 (e) | $10.75 | 0.05 | 0.08 (f) | 0.13 | (0.06) | — | (0.06) |
| Notes to Financial Highlights | |
| (a) | In addition to the fees and expenses that the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of any other funds in which it invests. Such indirect expenses are not included in the Fund’s reported expense ratios. |
| (b) | Total net expenses include the impact of certain fee waivers/expense reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
| (c) | The benefits derived from expense reductions had an impact of less than 0.01%. |
| (d) | Rounds to zero. |
| (e) | Institutional 3 Class shares commenced operations on March 1, 2017. Per share data and total return reflect activity from that date. |
| (f) | Calculation of the net gain (loss) per share (both realized and unrealized) does not correlate to the aggregate realized and unrealized gain (loss) presented in the Statement of Operations due to the timing of subscriptions and redemptions of Fund shares in relation to fluctuations in the market value of the portfolio. |
| (g) | Annualized. |
The accompanying Notes to Financial Statements are an
integral part of this statement.
| 20 | Columbia Virginia Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Financial Highlights
(continued)
|
Net
asset value, end of period |
Total
return |
Total
gross
expense ratio to average net assets (a) |
Total
net
expense ratio to average net assets (a),(b) |
Net
investment
income ratio to average net assets |
Portfolio
turnover |
Net
assets, end of period (000’s) |
|
| Institutional 3 Class | |||||||
| Year Ended 4/30/2019 | $10.57 | 5.04% | 0.54% | 0.47% | 2.97% | 13% | $88,421 |
| Year Ended 4/30/2018 | $10.46 | (0.13%) | 0.54% | 0.48% | 2.91% | 14% | $102,071 |
| Year Ended 4/30/2017 (e) | $10.82 | 1.17% | 0.55% (g) | 0.42% (g) | 3.04% (g) | 7% | $10 |
The accompanying Notes to Financial Statements are an integral part of this
statement.
|
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Virginia Intermediate Municipal Bond Fund | Annual Report 2019
|
21 |
Table of Contents
Notes to Financial Statements
April 30, 2019
April 30, 2019
Note 1. Organization
Columbia Virginia Intermediate Municipal Bond Fund (formerly
known as Columbia AMT-Free Virginia Intermediate Muni Bond Fund) (the Fund), a series of Columbia Funds Series Trust (the Trust), is a diversified fund. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as
an open-end management investment company organized as a Delaware statutory trust.
Effective May 14, 2019, Columbia AMT-Free Virginia
Intermediate Muni Bond Fund was renamed Columbia Virginia Intermediate Municipal Bond Fund.
Fund shares
The Trust may issue an unlimited number of shares (without par
value). Although all share classes generally have identical voting, dividend and liquidation rights, each share class votes separately when required by the Trust’s organizational documents or by law. Different share classes pay different
distribution amounts to the extent the expenses of such share classes differ, and distributions in liquidation will be proportional to the net asset value of each share class. Each share class has its own expense and sales charge structure. The Fund
offers each of the share classes identified below.
Class
A shares are subject to a maximum front-end sales charge of 3.00% based on the initial investment amount. Class A shares purchased without an initial sales charge are subject to a contingent deferred sales charge (CDSC) of 0.75% on certain
investments of $500,000 or more if redeemed within 12 months after purchase.
Advisor Class shares are not subject to sales charges and are
generally available only to omnibus retirement plans and certain investors as described in the Fund’s prospectus.
Class C shares are subject to a 1.00% CDSC on shares redeemed
within 12 months after purchase. Effective July 1, 2018, Class C shares automatically convert to Class A shares of the same Fund in the month of or the month following the 10-year anniversary of the Class C shares purchase date.
Institutional Class shares are not subject to sales charges
and are generally available only to eligible investors, which are subject to different investment minimums as described in the Fund’s prospectus.
Institutional 3 Class shares are not subject to sales charges
and are available to institutional and certain other investors as described in the Fund’s prospectus.
Note 2. Summary of significant accounting
policies
Basis of preparation
The Fund is an investment company that applies the accounting
and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946,
Financial Services - Investment Companies
(ASC 946). The financial statements are prepared
in accordance with U.S. generally accepted accounting principles (GAAP), which requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
The following is a summary of significant accounting policies
followed by the Fund in the preparation of its financial statements.
Security valuation
Debt securities generally are valued by pricing services
approved by the Board of Trustees based upon market transactions for normal, institutional-size trading units of similar securities. The services may use various pricing techniques that take into account, as applicable, factors such as yield,
quality, coupon rate, maturity, type of issue, trading characteristics and other data, as well as approved independent broker-dealer quotes. Debt securities for which quotations are not readily available or
| 22 | Columbia Virginia Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Notes to Financial Statements
(continued)
April 30, 2019
April 30, 2019
not believed to be
reflective of market value may also be valued based upon a bid quote from an approved independent broker-dealer. Debt securities maturing in 60 days or less are valued primarily at amortized cost value, unless this method results in a valuation that
management believes does not approximate market value.
Investments in open-end investment companies, including money
market funds, are valued at their latest net asset value.
Investments for which market quotations are not readily
available, or that have quotations which management believes are not reflective of market value or reliable, are valued at fair value as determined in good faith under procedures approved by and under the general supervision of the Board of
Trustees. If a security or class of securities (such as foreign securities) is valued at fair value, such value is likely to be different from the quoted or published price for the security.
The determination of fair value often requires significant
judgment. To determine fair value, management may use assumptions including but not limited to future cash flows and estimated risk premiums. Multiple inputs from various sources may be used to determine fair value.
GAAP requires disclosure regarding the inputs and valuation
techniques used to measure fair value and any changes in valuation inputs or techniques. In addition, investments shall be disclosed by major category. This information is disclosed following the Fund’s Portfolio of Investments.
Delayed delivery securities
The Fund may trade securities on other than normal settlement
terms, including securities purchased or sold on a “when-issued” or "forward commitment" basis. This may increase risk to the Fund since the other party to the transaction may fail to deliver, which could cause the Fund to subsequently
invest at less advantageous prices. The Fund designates cash or liquid securities in an amount equal to the delayed delivery commitment.
Security transactions
Security transactions are accounted for on the trade date.
Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes.
Income recognition
Interest income is recorded on an accrual basis. Market
premiums and discounts, including original issue discounts, are amortized and accreted, respectively, over the expected life of the security on all debt securities, unless otherwise noted.
The Fund may place a debt security on non-accrual status and
reduce related interest income when it becomes probable that the interest will not be collected and the amount of uncollectible interest can be reasonably estimated. A defaulted debt security is removed from non-accrual status when the issuer
resumes interest payments or when collectibility of interest is reasonably assured.
Dividend income is recorded on the ex-dividend date.
Expenses
General expenses of the Trust are allocated to the Fund and
other funds of the Trust based upon relative net assets or other expense allocation methodologies determined by the nature of the expense. Expenses directly attributable to the Fund are charged to the Fund. Expenses directly attributable to a
specific class of shares are charged to that share class.
Determination of class net asset value
All income, expenses (other than class-specific expenses,
which are charged to that share class, as shown in the Statement of Operations) and realized and unrealized gains (losses) are allocated to each class of the Fund on a daily basis, based on the relative net assets of each class, for purposes of
determining the net asset value of each class.
|
Columbia
Virginia Intermediate Municipal Bond Fund | Annual Report 2019
|
23 |
Table of Contents
Notes to Financial Statements
(continued)
April 30, 2019
April 30, 2019
Federal income tax status
The Fund intends to qualify each year as a regulated
investment company under Subchapter M of the Internal Revenue Code, as amended, and will distribute substantially all of its net tax-exempt and investment company taxable income and net capital gain, if any, for its tax year, and as such will not be
subject to federal income taxes. In addition, the Fund intends to distribute in each calendar year substantially all of its ordinary income, capital gain net income and certain other amounts, if any, such that the Fund should not be subject to
federal excise tax. Therefore, no federal income or excise tax provision is recorded.
Distributions to shareholders
Distributions from net investment income, if any, are declared
daily and paid monthly. Net realized capital gains, if any, are distributed at least annually. Income distributions and capital gain distributions are determined in accordance with federal income tax regulations, which may differ from GAAP.
Guarantees and indemnifications
Under the Trust’s organizational documents and, in some
cases, by contract, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust or its funds. In addition, certain of the Fund’s contracts with its service providers contain
general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown since the amount of any future claims that may be made against the Fund cannot be determined, and the Fund has no historical basis for predicting
the likelihood of any such claims.
Recent accounting
pronouncements
Accounting Standards Update 2017-08
Premium Amortization on Purchased Callable Debt Securities
In March 2017, the Financial Accounting Standards Board issued
Accounting Standards Update (ASU) No. 2017-08 Premium Amortization on Purchased Callable Debt Securities. ASU No. 2017-08 updates the accounting standards to shorten the amortization period for certain purchased callable debt securities, held at a
premium, to be amortized to the earliest call date. The update applies to securities with explicit, noncontingent call features that are callable at fixed prices and on preset dates. The standard is effective for annual periods beginning after
December 15, 2018 and interim periods within those fiscal years. Management does not expect the implementation of this guidance to have a material impact on the financial statement amounts and footnote disclosures.
Accounting Standards Update 2018-13 Disclosure Framework -
Changes to the Disclosure Requirements for Fair Value Measurement
In August 2018, the Financial Accounting Standards Board
issued Accounting Standards Update (ASU) No. 2018-13 Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. ASU No. 2018-13, in addition to other modifications and additions, removes the requirement to disclose the
amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy and the policy for the timing of transfers between levels. The standard is effective for annual periods beginning after December 15, 2019 and interim periods
within those fiscal years. At this time, management is evaluating the implication of this guidance and the impact it will have on the financial statement disclosures, if any.
Disclosure Update and Simplification
In September 2018, the Securities and Exchange Commission
(SEC) released Final Rule 33-10532, Disclosure Update and Simplification, which amends certain financial statement disclosure requirements that the SEC determined to be redundant, outdated, or superseded in light of other SEC disclosure
requirements, GAAP, or changes in the information environment. As a result of the amendments, management implemented disclosure changes which included removing the components of distributable earnings presented on the Statement of Assets and
Liabilities and combining income and gain distributions paid to shareholders as presented on the Statement of Changes in Net Assets. Any values presented to meet prior year requirements were left unchanged. The amendments had no effect on the
Fund’s net assets or results of operation.
| 24 | Columbia Virginia Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Notes to Financial Statements
(continued)
April 30, 2019
April 30, 2019
Note 3. Fees and other transactions with
affiliates
Management services fees
The Fund has entered into a Management Agreement with Columbia
Management Investment Advisers, LLC (the Investment Manager), a wholly-owned subsidiary of Ameriprise Financial, Inc. (Ameriprise Financial). Under the Management Agreement, the Investment Manager provides the Fund with investment research and
advice, as well as administrative and accounting services. The management services fee is an annual fee that is equal to a percentage of the Fund’s daily net assets that declines from 0.47% to 0.31% as the Fund’s net assets increase. The
effective management services fee rate for the year ended April 30, 2019 was 0.47% of the Fund’s average daily net assets.
Compensation of board members
Members of the Board of Trustees who are not officers or
employees of the Investment Manager or Ameriprise Financial are compensated for their services to the Fund as disclosed in the Statement of Operations. Under a Deferred Compensation Plan (the Deferred Plan), these members of the Board of Trustees
may elect to defer payment of up to 100% of their compensation. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of certain funds managed by the Investment Manager. The Fund’s liability for these
amounts is adjusted for market value changes and remains in the Fund until distributed in accordance with the Deferred Plan. All amounts payable under the Deferred Plan constitute a general unsecured obligation of the Fund.
Compensation of Chief Compliance Officer
The Board of Trustees has appointed a Chief Compliance Officer
to the Fund in accordance with federal securities regulations. As disclosed in the Statement of Operations, a portion of the Chief Compliance Officer’s total compensation is allocated to the Fund, along with other allocations to affiliated
registered investment companies managed by the Investment Manager and its affiliates, based on relative net assets.
Transfer agency fees
Under a Transfer and Dividend Disbursing Agent Agreement,
Columbia Management Investment Services Corp. (the Transfer Agent), an affiliate of the Investment Manager and a wholly-owned subsidiary of Ameriprise Financial, is responsible for providing transfer agency services to the Fund. The Transfer Agent
has contracted with DST Asset Manager Solutions, Inc. (DST) to serve as sub-transfer agent. The Transfer Agent pays the fees of DST for services as sub-transfer agent and DST is not entitled to reimbursement for such fees from the Fund (with the
exception of out-of-pocket fees).
The Fund pays the
Transfer Agent a monthly transfer agency fee based on the number or the average value of accounts, depending on the type of account. In addition, the Fund pays the Transfer Agent a fee for shareholder services based on the number of accounts or on a
percentage of the average aggregate value of the Fund’s shares maintained in omnibus accounts up to the lesser of the amount charged by the financial intermediary or a cap established by the Board of Trustees from time to time.
The Transfer Agent also receives compensation from the Fund
for various shareholder services and reimbursements for certain out-of-pocket fees. Total transfer agency fees for Institutional 3 Class shares are subject to an annual limitation of not more than 0.02% of the average daily net assets attributable
to Institutional 3 Class shares.
For the year ended
April 30, 2019, the Fund’s effective transfer agency fee rates as a percentage of average daily net assets of each class were as follows:
|
Columbia
Virginia Intermediate Municipal Bond Fund | Annual Report 2019
|
25 |
Table of Contents
Notes to Financial Statements
(continued)
April 30, 2019
April 30, 2019
An
annual minimum account balance fee of $20 may apply to certain accounts with a value below the applicable share class’s initial minimum investment requirements to reduce the impact of small accounts on transfer agency fees. These minimum
account balance fees are remitted to the Fund and recorded as part of expense reductions in the Statement of Operations. For the year ended April 30, 2019, these minimum account balance fees reduced total expenses of the Fund by $20.
Distribution and service fees
The Fund has entered into an agreement with Columbia
Management Investment Distributors, Inc. (the Distributor), an affiliate of the Investment Manager and a wholly-owned subsidiary of Ameriprise Financial, for distribution and shareholder services. The Board of Trustees has approved, and the Fund has
adopted, distribution and shareholder service plans (the Plans) applicable to certain share classes, which set the distribution and service fees for the Fund. These fees are calculated daily and are intended to compensate the Distributor and/or
eligible selling and/or servicing agents for selling shares of the Fund and providing services to investors.
Under the Plans, the Fund pays a monthly combined distribution
and service fee to the Distributor at the maximum annual rate of 0.25% of the average daily net assets attributable to Class A shares of the Fund. Also under the Plans, the Fund pays a monthly service fee to the Distributor at the maximum annual
rate of 0.25% of the average daily net assets attributable to Class C shares of the Fund and a monthly distribution fee to the Distributor at the maximum annual rate of 0.75% of the average daily net assets attributable to Class C shares of the
Fund.
Sales charges (unaudited)
Sales charges, including front-end charges and CDSCs, received
by the Distributor for distributing Fund shares for the year ended April 30, 2019, if any, are listed below:
| Amount ($) | |
| Class A | 7,963 |
| Class C | 44 |
Expenses waived/reimbursed by the
Investment Manager and its affiliates
The Investment
Manager and certain of its affiliates have contractually agreed to waive fees and/or reimburse expenses (excluding certain fees and expenses described below) for the period(s) disclosed below, unless sooner terminated at the sole discretion of the
Board of Trustees, so that the Fund’s net operating expenses, after giving effect to fees waived/expenses reimbursed and any balance credits and/or overdraft charges from the Fund’s custodian, do not exceed the following annual rate(s)
as a percentage of the class’ average daily net assets:
|
September
1, 2018
through August 31, 2019 |
Prior
to
September 1, 2018 |
|
| Class A | 0.81% | 0.81% |
| Advisor Class | 0.56 | 0.56 |
| Class C | 1.56 | 1.56 |
| Institutional Class | 0.56 | 0.56 |
| Institutional 3 Class | 0.47 | 0.48 |
Under the agreement governing
these fee waivers and/or expense reimbursement arrangements, the following fees and expenses are excluded from the waiver/reimbursement commitment, and therefore will be paid by the Fund, if applicable: taxes (including foreign transaction taxes),
expenses associated with investments in affiliated and non-affiliated pooled investment vehicles (including mutual funds and exchange-traded funds), transaction costs and brokerage commissions, costs related to any securities lending program,
dividend expenses associated with securities sold short, inverse floater program fees and expenses, transaction charges and interest on borrowed money, interest, infrequent and/or unusual expenses and any other expenses the exclusion of which is
specifically approved by the Board of Trustees. This
| 26 | Columbia Virginia Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Notes to Financial Statements
(continued)
April 30, 2019
April 30, 2019
agreement may be
modified or amended only with approval from the Investment Manager, certain of its affiliates and the Fund. Any fees waived and/or expenses reimbursed under the expense reimbursement arrangements described above are not recoverable by the Investment
Manager or its affiliates in future periods.
Note
4. Federal tax information
The timing and
character of income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP because of temporary or permanent book to tax differences.
At April 30, 2019, these differences were primarily due to
differing treatment for post-October capital losses, trustees’ deferred compensation, distributions and distribution reclassifications. To the extent these differences were permanent, reclassifications were made among the components of the
Fund’s net assets. Temporary differences do not require reclassifications.
The following reclassifications were made:
|
Excess
of distributions
over net investment income ($) |
Accumulated
net realized (loss) ($) |
Paid
in
capital ($) |
| (12,484) | 12,484 | — |
Net investment income (loss) and
net realized gains (losses), as disclosed in the Statement of Operations, and net assets were not affected by this reclassification.
The tax character of distributions paid during the years
indicated was as follows:
| Year Ended April 30, 2019 | Year Ended April 30, 2018 | ||||||
|
Ordinary
income ($) |
Tax-exempt
income ($) |
Long-term
capital gains ($) |
Total ($) |
Ordinary
income ($) |
Tax-exempt
income ($) |
Long-term
capital gains ($) |
Total ($) |
| 44,111 | 4,469,928 | 1,120,432 | 5,634,471 | 41,955 | 5,224,720 | 503,515 | 5,770,190 |
Short-term capital gain
distributions, if any, are considered ordinary income distributions for tax purposes.
At April 30, 2019, the components of distributable earnings on
a tax basis were as follows:
|
Undistributed
ordinary income ($) |
Undistributed
tax-
exempt income ($) |
Undistributed
long-term capital gains ($) |
Capital
loss
carryforwards ($) |
Net
unrealized
appreciation ($) |
| — | 356,611 | — | — | 4,057,541 |
At April 30, 2019, the cost of all
investments for federal income tax purposes along with the aggregate gross unrealized appreciation and depreciation based on that cost was:
|
Federal
tax cost ($) |
Gross
unrealized
appreciation ($) |
Gross
unrealized
(depreciation) ($) |
Net
unrealized
appreciation ($) |
| 133,380,857 | 5,757,930 | (1,700,389) | 4,057,541 |
Tax cost of investments and
unrealized appreciation/(depreciation) may also include timing differences that do not constitute adjustments to tax basis.
Under current tax rules, regulated investment companies can
elect to treat certain late-year ordinary losses incurred and post-October capital losses (capital losses realized after October 31) as arising on the first day of the following taxable year. As of April 30, 2019, the Fund will elect to treat the
following late-year ordinary losses and post-October capital losses as arising on May 1, 2019.
|
Late
year
ordinary losses ($) |
Post-October
capital losses ($) |
| — | 66,450 |
|
Columbia
Virginia Intermediate Municipal Bond Fund | Annual Report 2019
|
27 |
Table of Contents
Notes to Financial Statements
(continued)
April 30, 2019
April 30, 2019
Management of the Fund has concluded that there are no
significant uncertain tax positions in the Fund that would require recognition in the financial statements. However, management’s conclusion may be subject to review and adjustment at a later date based on factors including, but not limited
to, new tax laws, regulations, and administrative interpretations (including relevant court decisions). Generally, the Fund’s federal tax returns for the prior three fiscal years remain subject to examination by the Internal Revenue
Service.
Note 5. Portfolio information
The cost of purchases and proceeds from sales of securities,
excluding short-term investments and derivatives, if any, aggregated to $19,480,873 and $44,914,257, respectively, for the year ended April 30, 2019. The amount of purchase and sale activity impacts the portfolio turnover rate reported in the
Financial Highlights.
Note 6. Interfund
lending
Pursuant to an exemptive order granted by the
Securities and Exchange Commission, the Fund participates in a program (the Interfund Program) allowing each participating Columbia Fund (each, a Participating Fund) to lend money directly to and, except for closed-end funds and money market funds,
borrow money directly from other Participating Funds for temporary purposes. The amounts eligible for borrowing and lending under the Interfund Program are subject to certain restrictions.
Interfund loans are subject to the risk that the borrowing
fund could be unable to repay the loan when due, and a delay in repayment to the lending fund could result in lost opportunities and/or additional lending costs. The exemptive order is subject to conditions intended to mitigate conflicts of interest
arising from the Investment Manager’s relationship with each Participating Fund.
The Fund did not borrow or lend money under the Interfund
Program during the year ended April 30, 2019.
Note
7. Line of credit
The Fund has access to a
revolving credit facility with a syndicate of banks led by Citibank, N.A., HSBC Bank USA, N.A. and JPMorgan Chase Bank, N.A. whereby the Fund may borrow for the temporary funding of shareholder redemptions or for other temporary or emergency
purposes. The credit facility, which is a collective agreement between the Fund and certain other funds managed by the Investment Manager or an affiliated investment manager, severally and not jointly, permits collective borrowings up to $1 billion.
Interest is charged to each participating fund based on its borrowings at a rate equal to the higher of (i) the federal funds effective rate, (ii) the one-month LIBOR rate and (iii) the overnight bank funding rate, plus in each case, 1.00%. Each
borrowing under the credit facility matures no later than 60 days after the date of borrowing. The Fund also pays a commitment fee equal to its pro rata share of the unused amount of the credit facility at a rate of 0.15% per annum. The commitment
fee is included in other expenses in the Statement of Operations. This agreement expires annually in December unless extended or renewed.
The Fund had no borrowings during the year ended April 30,
2019.
Note 8. Significant risks
Credit risk
Credit risk is the risk that the value of debt securities in
the Fund’s portfolio may decline because the issuer may default and fail to pay interest or repay principal when due. Rating agencies assign credit ratings to debt securities to indicate their credit risk. Lower rated or unrated debt
securities held by the Fund may present increased credit risk as compared to higher-rated debt securities.
Geographic concentration risk
Because the Fund invests substantially in municipal securities
issued by the state identified in the Fund’s name and political sub-divisions of that state, the Fund will be particularly affected by adverse tax, legislative, regulatory, demographic or political changes as well as changes impacting the
state’s financial, economic or other condition and prospects. In addition, because of the relatively small number of issuers of tax-exempt securities in the state, the Fund may invest a higher percentage of
| 28 | Columbia Virginia Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Notes to Financial Statements
(continued)
April 30, 2019
April 30, 2019
assets in a single
issuer and, therefore, be more exposed to the risk of loss than a fund that invests more broadly. The value of municipal and other securities owned by the Fund also may be adversely affected by future changes in federal or state income tax
laws.
Interest rate risk
Interest rate risk is the risk of losses attributable to
changes in interest rates. In general, if prevailing interest rates rise, the values of debt securities tend to fall, and if interest rates fall, the values of debt securities tend to rise. Actions by governments and central banking authorities can
result in increases in interest rates. Increasing interest rates may negatively affect the value of debt securities held by the Fund, resulting in a negative impact on the Fund’s performance and net asset value per share. In general, the
longer the maturity or duration of a debt security, the greater its sensitivity to changes in interest rates.
Liquidity risk
Liquidity risk is the risk associated with a lack of
marketability of investments which may make it difficult to sell the investment at a desirable time or price. Changing regulatory, market or other conditions or environments (for example, the interest rate or credit environments) may adversely
affect the liquidity of the Fund’s investments. The Fund may have to accept a lower selling price for the holding, sell other investments, or forego another, more appealing investment opportunity. Generally, the less liquid the market at the
time the Fund sells a portfolio investment, the greater the risk of loss or decline of value to the Fund. A less liquid market can lead to an increase in Fund redemptions, which may negatively impact Fund performance and net asset value per share,
including, for example, if the Fund is forced to sell securities in a down market.
Shareholder concentration risk
At April 30, 2019, one unaffiliated shareholder of record
owned 72.7% of the outstanding shares of the Fund in one or more accounts. The Fund has no knowledge about whether any portion of those shares was owned beneficially. Subscription and redemption activity by concentrated accounts may have a
significant effect on the operations of the Fund. In the case of a large redemption, the Fund may be forced to sell investments at inopportune times, including its liquid positions, which may result in Fund losses and the Fund holding a higher
percentage of less liquid positions. Large redemptions could result in decreased economies of scale and increased operating expenses for non-redeeming Fund shareholders.
Note 9. Subsequent events
Management has evaluated the events and transactions that
have occurred through the date the financial statements were issued and noted no items requiring adjustment of the financial statements or additional disclosure.
Note 10. Information regarding pending and settled
legal proceedings
Ameriprise Financial and certain of
its affiliates have historically been involved in a number of legal, arbitration and regulatory proceedings, including routine litigation, class actions, and governmental actions, concerning matters arising in connection with the conduct of their
business activities. Ameriprise Financial believes that the Fund is not currently the subject of, and that neither Ameriprise Financial nor any of its affiliates are the subject of, any pending legal, arbitration or regulatory proceedings that are
likely to have a material adverse effect on the Fund or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Fund. Ameriprise Financial is required to make quarterly (10-Q), annual (10-K) and, as necessary,
8-K filings with the Securities and Exchange Commission (SEC) on legal and regulatory matters that relate to Ameriprise Financial and its affiliates. Copies of these filings may be obtained by accessing the SEC website at www.sec.gov.
There can be no assurance that these matters, or the adverse
publicity associated with them, will not result in increased Fund redemptions, reduced sale of Fund shares or other adverse consequences to the Fund. Further, although we believe proceedings are not likely to have a material adverse effect on the
Fund or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Fund, these proceedings are subject to uncertainties and, as such, we are unable to estimate the possible loss or range of loss that may result.
An adverse outcome in one or more of these proceedings could result in adverse judgments, settlements, fines, penalties or other relief that could have a material adverse effect on the consolidated financial condition or results of operations of
Ameriprise Financial.
|
Columbia
Virginia Intermediate Municipal Bond Fund | Annual Report 2019
|
29 |
Table of Contents
Report of Independent Registered Public Accounting Firm
To the
Board of Trustees of Columbia Funds Series Trust and Shareholders of Columbia Virginia Intermediate Municipal Bond Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and
liabilities, including the portfolio of investments, of Columbia Virginia Intermediate Municipal Bond Fund (formerly known as Columbia AMT-Free Virginia Intermediate Muni Bond Fund) (one of the funds constituting Columbia Funds Series Trust,
referred to hereafter as the "Fund") as of April 30, 2019, the related statement of operations for the year ended April 30, 2019, the statement of changes in net assets for each of the two years in the period ended April 30, 2019, including the
related notes, and the financial highlights for each of the periods indicated therein (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the
financial position of the Fund as of April 30, 2019, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended April 30, 2019 and the financial highlights for each of the
periods indicated therein in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the
Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB)
and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in
accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks
of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation
of securities owned as of April 30, 2019 by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our
opinion.
/s/PricewaterhouseCoopers LLP
Minneapolis, Minnesota
June 21, 2019
We have served as the auditor of one or more investment
companies within the Columbia Funds Complex since 1977.
| 30 | Columbia Virginia Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Federal Income Tax Information
(Unaudited)
(Unaudited)
The Fund hereby designates the following tax attributes for
the fiscal year ended April 30, 2019. Shareholders will be notified in early 2020 of the amounts for use in preparing 2019 income tax returns.
|
Capital
gain dividend |
Exempt-
interest dividends |
| $554,024 | 99.02% |
Capital gain dividend. The Fund
designates as a capital gain dividend the amount reflected above, or if subsequently determined to be different, the net capital gain of such fiscal period.
Exempt-interest dividends. The percentage of net investment
income distributed during the fiscal year that qualifies as exempt-interest dividends for federal income tax purposes.
|
Columbia
Virginia Intermediate Municipal Bond Fund | Annual Report 2019
|
31 |
Table of Contents
TRUSTEES AND OFFICERS
The
Board oversees the Fund’s operations and appoints officers who are responsible for day-to-day business decisions based on policies set by the Board. The following table provides basic biographical information about the Fund’s Trustees as
of the printing of this report, including their principal occupations during the past five years, although specific titles for individuals may have varied over the period. Under current Board policy, Trustees not affiliated with the Investment
Manager generally may serve through the end of the calendar year in which they reach the mandatory retirement age established by the Board.
Independent trustees
|
Name,
address, year of birth |
Position
held
with the Trust and length of service |
Principal
occupation(s)
during past five years and other relevant professional experience |
Number
of
Funds in the Columbia Funds complex overseen |
Other
directorships
held by Trustee during the past five years |
|
George
S. Batejan
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1953 |
Trustee since 1/17 | Executive Vice President, Global Head of Technology and Operations, Janus Capital Group, Inc., 2010-2016 | 119 | Former Chairman of the Board, NICSA (National Investment Company Services Association) (Executive Committee, Nominating Committee and Governance Committee), 2014-2016; former Director, Intech Investment Management, 2011-2016; former Board Member, Metro Denver Chamber of Commerce, 2015-2016; former Advisory Board Member, University of Colorado Business School, 2015-2018 |
|
Kathleen
Blatz
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1954 |
Trustee since 1/06 for RiverSource Funds and since 6/11 for Nations Funds | Attorney; specializing in arbitration and mediation; Chief Justice, Minnesota Supreme Court, 1998-2006; Associate Justice, Minnesota Supreme Court, 1996-1998; Fourth Judicial District Court Judge, Hennepin County, 1994-1996; Attorney in private practice and public service, 1984-1993; State Representative, Minnesota House of Representatives, 1979-1993, which included service on the Tax and Financial Institutions and Insurance Committees; Member and Interim Chair, Minnesota Sports Facilities Authority, January 2017-July 2017; Interim President and Chief Executive Officer, Blue Cross and Blue Shield of Minnesota (health care insurance), February-July 2018 | 119 | Trustee, BlueCross BlueShield of Minnesota since 2009 (Chair of the Business Development Committee, 2014-2017; Chair of the Governance Committee since 2017); Chair of the Robina Foundation since August 2013; former Member and Chair of the Board, Minnesota Sports Facilities Authority, January 2017-July 2017 |
|
Edward
J. Boudreau, Jr.
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1944 |
Chair of the Board since 1/18; Trustee since 6/11 for RiverSource Funds and since 1/05 for Nations Funds | Managing Director, E.J. Boudreau & Associates (consulting) since 2000; FINRA Industry Arbitrator, 2002-present; Chairman and Chief Executive Officer, John Hancock Investments (asset management), Chairman and Interested Trustee for open-end and closed-end funds offered by John Hancock, 1989-2000; John Hancock Mutual Life Insurance Company, including Senior Vice President and Treasurer and Senior Vice President Information Technology, 1968-1988 | 119 | Former Trustee, Boston Museum of Science (Chair of Finance Committee) 1985-2013; former Trustee, BofA Funds Series Trust (11 funds), 2005-2011 |
| 32 | Columbia Virginia Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
TRUSTEES AND OFFICERS
(continued)
Independent trustees
(continued)
|
Name,
address, year of birth |
Position
held
with the Trust and length of service |
Principal
occupation(s)
during past five years and other relevant professional experience |
Number
of
Funds in the Columbia Funds complex overseen |
Other
directorships
held by Trustee during the past five years |
|
Pamela
G. Carlton
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1954 |
Trustee since 7/07 for RiverSource Funds and since 6/11 for Nations Funds | President, Springboard — Partners in Cross Cultural Leadership (consulting company) since 2003; Managing Director of US Equity Research, JP Morgan Chase, 1999-2003; Director of US Equity Research, Chase Asset Management, 1996-1999; Co-Director Latin America Research, 1993-1996, COO Global Research, 1992-1996, Co-Director of US Research, 1991-1992, Investment Banker, Morgan Stanley, 1982-1991 | 119 | Trustee, New York Presbyterian Hospital Board (Executive Committee and Chair of Human Resources Committee) since 1996; Director, Laurel Road Bank (Audit Committee) since 2017 |
|
Patricia
M. Flynn
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1950 |
Trustee since 11/04 for RiverSource Funds and since 6/11 for Nations Funds | Trustee Professor of Economics and Management, Bentley University since 1976 (also teaches and conducts research on corporate governance); Dean, McCallum Graduate School of Business, Bentley University, 1992-2002 | 119 | Trustee, MA Taxpayers Foundation since 1997; Board of Directors, The MA Business Roundtable since 2003; Board of Governors, Innovation Institute, MA Technology Collaborative since 2010 |
|
Brian
J. Gallagher
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1954 |
Trustee since 12/17 | Retired; Partner with Deloitte & Touche LLP and its predecessors, 1977-2016 | 117 | Trustee, Catholic Schools Foundation since 2004 |
|
Catherine
James Paglia
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1952 |
Trustee since 11/04 for RiverSource Funds and since 6/11 for Nations Funds | Director, Enterprise Asset Management, Inc. (private real estate and asset management company) since September 1998; Managing Director and Partner, Interlaken Capital, Inc., 1989-1997; Managing Director, Morgan Stanley, 1982-1989; Vice President, Investment Banking, 1980-1982, Associate, Investment Banking, 1976-1980, Dean Witter Reynolds, Inc. | 119 | Director, Valmont Industries, Inc. (irrigation systems manufacturer) since 2012; Trustee, Carleton College (on the Investment Committee); Trustee, Carnegie Endowment for International Peace (on the Investment Committee) |
|
Anthony
M. Santomero
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1946 |
Trustee since 6/11 for RiverSource Funds and since 1/08 for Nations Funds | Richard K. Mellon Professor Emeritus of Finance, The Wharton School, University of Pennsylvania, since 2002; Senior Advisor, McKinsey & Company (consulting), 2006-2008; President, Federal Reserve Bank of Philadelphia, 2000- 2006; Professor of Finance, The Wharton School, University of Pennsylvania, 1972-2002 | 119 | Trustee, Penn Mutual Life Insurance Company since March 2008; Director, Renaissance Reinsurance Ltd. since May 2008; former Trustee, BofA Funds Series Trust (11 funds), 2008-2011; former Director, Citigroup Inc. and Citibank, N.A., 2009-2019 |
|
Columbia
Virginia Intermediate Municipal Bond Fund | Annual Report 2019
|
33 |
Table of Contents
TRUSTEES AND OFFICERS
(continued)
Independent trustees
(continued)
|
Name,
address, year of birth |
Position
held
with the Trust and length of service |
Principal
occupation(s)
during past five years and other relevant professional experience |
Number
of
Funds in the Columbia Funds complex overseen |
Other
directorships
held by Trustee during the past five years |
|
Minor
M. Shaw
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1947 |
Trustee since 6/11 for RiverSource Funds and since 2003 for Nations Funds | President, Micco LLC (private investments) since 2011; President, Micco Corp. (family investment business), 1998-2011 | 119 | Director, BlueCross BlueShield of South Carolina since April 2008; Board Chair, Hollingsworth Funds since 2016; Advisory Board member, Duke Energy Corp. since October 2016; Chair of the Duke Endowment; Chair of Greenville – Spartanburg Airport Commission; former Trustee, BofA Funds Series Trust (11 funds), 2003-2011; former Director, Piedmont Natural Gas, 2004-2016; former Director, National Association of Corporate Directors, Carolinas Chapter, 2013-2018 |
|
Sandra
Yeager
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1964 |
Trustee since 12/17 | Retired; President and founder, Hanoverian Capital, LLC (SEC registered investment advisor firm), 2008-2016; Managing Director, DuPont Capital, 2006-2008; Managing Director, Morgan Stanley Investment Management, 2004-2006; Senior Vice President, Alliance Bernstein, 1990-2004 | 117 | Director, NAPE Education Foundation since October 2016 |
Interested trustee affiliated with Investment
Manager*
|
Name,
address, year of birth |
Position held with the Trust and length of service |
Principal
occupation(s) during the
past five years and other relevant professional experience |
Number
of
Funds in the Columbia Funds complex overseen |
Other
directorships
held by Trustee during the past five years |
|
William
F. Truscott
c/o Columbia Management Investment Advisers, LLC 225 Franklin St. Boston, MA 02110 1960 |
Trustee since 11/01 for RiverSource Funds and since 6/11 for Nations Funds; Senior Vice President since 2002 for RiverSource Funds and since 5/10 for Nations Funds | Chairman of the Board and President, Columbia Management Investment Advisers, LLC since May 2010 and February 2012, respectively; Chief Executive Officer, Global Asset Management, Ameriprise Financial, Inc. since September 2012 (previously Chief Executive Officer, U.S. Asset Management & President, Annuities, May 2010 - September 2012); Director and Chief Executive Officer, Columbia Management Investment Distributors, Inc. since May 2010 and February 2012, respectively; Chairman of the Board and Chief Executive Officer, RiverSource Distributors, Inc. since 2006; Director, Threadneedle Asset Management Holdings, SARL since 2014; President and Chief Executive Officer, Ameriprise Certificate Company, 2006 - August 2012. | 188 | Chairman of the Board, Columbia Management Investment Advisers, LLC since May 2010; Director, Columbia Management Investment Distributors, Inc. since May 2010; former Director, Ameriprise Certificate Company, 2006-January 2013 |
| * | Interested person (as defined under the 1940 Act) by reason of being an officer, director, security holder and/or employee of the Investment Manager or Ameriprise Financial. |
| 34 | Columbia Virginia Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
TRUSTEES AND OFFICERS
(continued)
Nations Funds refer to the Funds within the Columbia Funds
Complex that historically bore the Nations brand and includes series of Columbia Funds Series Trust. RiverSource Funds refer to the Funds within the Columbia Funds Complex that historically bore the RiverSource brand and includes series of Columbia
Funds Series Trust II.
The Statement of Additional
Information has additional information about the Fund’s Board members and is available, without charge, upon request by calling 800.345.6611, visiting columbiathreadneedleus.com/investor/ or contacting your financial intermediary.
|
Columbia
Virginia Intermediate Municipal Bond Fund | Annual Report 2019
|
35 |
Table of Contents
TRUSTEES AND OFFICERS
(continued)
The Board has appointed officers who are responsible for
day-to-day business decisions based on policies it has established. The officers serve at the pleasure of the Board. The following table provides basic information about the Officers of the Fund as of the printing of this report, including principal
occupations during the past five years, although their specific titles may have varied over the period. In addition to Mr. Truscott, who is Senior Vice President, the Fund’s other officers are:
Fund officers
|
Name,
address and year of birth |
Position
and year
first appointed to position for any Fund in the Columbia Funds complex or a predecessor thereof |
Principal occupation(s) during past five years |
|
Christopher
O. Petersen
5228 Ameriprise Financial Center Minneapolis, MN 55474 Born 1970 |
President and Principal Executive Officer (2015) | Vice President and Lead Chief Counsel, Ameriprise Financial, Inc. since January 2015 (previously Vice President and Chief Counsel, January 2010 - December 2014; officer of Columbia Funds and affiliated funds since 2007. |
|
Michael
G. Clarke
225 Franklin Street Boston, MA 02110 Born 1969 |
Chief Financial Officer (Principal Financial Officer) (2009) and Senior Vice President (2019) | Vice President, Head of North American Operations, and Co-Head of Global Operations, Columbia Management Investment Advisers, LLC, since June 2019 (previously Vice President – Accounting and Tax, May 2010 - May 2019); senior officer of Columbia Funds and affiliated funds since 2002 (previously Treasurer and Chief Accounting Officer, January 2009 - January 2019 and December 2015 - January 2019, respectively). |
|
Joseph
Beranek
5890 Ameriprise Financial Center Minneapolis, MN 55474 Born 1965 |
Treasurer and Chief Accounting Officer (Principal Accounting Officer) (2019) | Vice President — Mutual Fund Accounting and Financial Reporting, Columbia Management Investment Advisers, LLC, since December 2018 and March 2017, respectively (previously Vice President — Pricing and Corporate Actions, May 2010 - March 2017). |
|
Paul
B. Goucher
485 Lexington Avenue New York, NY 10017 Born 1968 |
Senior Vice President (2011) and Assistant Secretary (2008) | Senior Vice President and Assistant General Counsel, Ameriprise Financial, Inc. since January 2017 (previously Vice President and Lead Chief Counsel, November 2008 - January 2017 and January 2013 - January 2017, respectively); Vice President, Chief Legal Officer and Assistant Secretary, Columbia Management Investment Advisers, LLC since March 2015 (previously Vice President and Assistant Secretary, May 2010 – March 2015). |
|
Thomas
P. McGuire
225 Franklin Street Boston, MA 02110 Born 1972 |
Senior Vice President and Chief Compliance Officer (2012) | Vice President — Asset Management Compliance, Ameriprise Financial, Inc., since May 2010; Chief Compliance Officer, Ameriprise Certificate Company since September 2010. |
|
Colin
Moore
225 Franklin Street Boston, MA 02110 Born 1958 |
Senior Vice President (2010) | Executive Vice President and Global Chief Investment Officer, Ameriprise Financial, Inc., since July 2013; Executive Vice President and Global Chief Investment Officer, Columbia Management Investment Advisers, LLC since July 2013. |
|
Ryan
C. Larrenaga
225 Franklin Street Boston, MA 02110 Born 1970 |
Senior Vice President (2017), Chief Legal Officer (2017), and Secretary (2015) | Vice President and Chief Counsel, Ameriprise Financial, Inc. since August 2018 (previously Vice President and Group Counsel, August 2011 - August 2018); officer of Columbia Funds and affiliated funds since 2005. |
|
Michael
E. DeFao
225 Franklin Street Boston, MA 02110 Born 1968 |
Vice President (2011) and Assistant Secretary (2010) | Vice President and Chief Counsel, Ameriprise Financial, Inc. since May 2010. |
|
Lyn
Kephart-Strong
5228 Ameriprise Financial Center Minneapolis, MN 55474 Born 1960 |
Vice President (2015) | President, Columbia Management Investment Services Corp. since October 2014; Vice President & Resolution Officer, Ameriprise Trust Company since August 2009. |
| 36 | Columbia Virginia Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Additional information
The
Fund mails one shareholder report to each shareholder address, unless such shareholder elected to receive shareholder reports from the Fund electronically. If you would like more than one report, please call shareholder services at 800.345.6611 and
additional reports will be sent to you.
Proxy voting
policies and procedures
The policy of the Board of
Trustees is to vote the proxies of the companies in which the Fund holds investments consistent with the procedures as stated in the Statement of Additional Information (SAI). You may obtain a copy of the SAI without charge by calling 800.345.6611;
contacting your financial intermediary; visiting columbiathreadneedleus.com/investor/; or searching the website of the Securities and Exchange Commission (SEC) at sec.gov. Information regarding how the Fund voted proxies relating to portfolio
securities is filed with the SEC by August 31st for the most recent 12-month period ending June 30th of that year, and is available without charge by visiting columbiathreadneedleus.com/investor/, or searching the website of the SEC at
sec.gov.
Quarterly schedule of investments
The Fund files a complete schedule of portfolio holdings
with the SEC for the first and third quarters of each fiscal year on Form N-Q or Form N-PORT (available for filings after March 31, 2019). The Fund’s Form N-Q or Form N-PORT is available on the SEC’s website at sec.gov. The Fund’s
complete schedule of portfolio holdings, as filed on Form N-Q or Form N-PORT, can also be obtained without charge, upon request, by calling 800.345.6611.
Additional Fund information
For more information about the Fund, please visit
columbiathreadneedleus.com/investor/ or call 800.345.6611. Customer Service Representatives are available to answer your questions Monday through Friday from 8 a.m. to 7 p.m. Eastern time.
Fund investment manager
Columbia Management Investment Advisers, LLC
225 Franklin Street
Boston, MA 02110
Fund distributor
Columbia Management Investment Distributors, Inc.
225 Franklin Street
Boston, MA 02110
Fund transfer agent
Columbia Management Investment Services Corp.
P.O. Box 219104
Kansas City, MO 64121-9104
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Virginia Intermediate Municipal Bond Fund | Annual Report 2019
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Table of Contents
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Table of Contents
Columbia Virginia Intermediate Municipal Bond Fund
P.O. Box 219104
Kansas City, MO 64121-9104
Please read and consider the investment objectives, risks,
charges and expenses for any fund carefully before investing. For a prospectus and summary prospectus, which contains this and other important information about the Fund, go to
columbiathreadneedleus.com/investor/ . The Fund is distributed by Columbia Management Investment Distributors, Inc., member FINRA, and managed by Columbia Management Investment Advisers, LLC.
columbiathreadneedleus.com/investor/ . The Fund is distributed by Columbia Management Investment Distributors, Inc., member FINRA, and managed by Columbia Management Investment Advisers, LLC.
Columbia Threadneedle Investments (Columbia Threadneedle) is
the global brand name of the Columbia and Threadneedle group of companies. All rights reserved.
© 2019 Columbia Management Investment Advisers, LLC.
columbiathreadneedleus.com/investor/
ANN239_04_J01_(06/19)
Table of Contents
Annual
Report
April 30, 2019
April 30, 2019
Columbia South Carolina Intermediate Municipal
Bond Fund
(formerly Columbia AMT-Free South
Carolina Intermediate Muni Bond Fund)
Beginning on January 1, 2021, as permitted by regulations
adopted by the Securities and Exchange Commission, paper copies of the Fund’s annual and semiannual shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the
reports will be made available on the Fund’s website (columbiathreadneedleus.com/investor/), and each time a report is posted you will be notified by mail and provided with a website address to access the report.
If you have already elected to receive shareholder reports
electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically at any time by contacting your financial intermediary (such
as a broker-dealer or bank) or, for Fund shares held directly with the Fund, by calling 800.345.6611 or by enrolling in “eDelivery” by logging into your account at columbiathreadneedleus.com/investor/.
You may elect to receive all future reports in paper free of
charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue receiving paper copies of your shareholder reports. If you invest directly with the Fund, you can call 800.345.6611 to
let the Fund know you wish to continue receiving paper copies of your shareholder reports. Your election to receive paper reports will apply to all Columbia Funds held in your account if you invest through a financial intermediary or all Columbia
Funds held with the fund complex if you invest directly with the Fund.
Not FDIC Insured • No bank guarantee • May lose
value
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Columbia South Carolina Intermediate Municipal Bond
Fund | Annual Report 2019
Table of Contents
Fund at a Glance
Investment objective
Columbia South Carolina Intermediate
Municipal Bond Fund (the Fund) seeks current income exempt from U.S. federal income tax and South Carolina individual income tax, consistent with moderate fluctuation of principal.
Portfolio
management
Paul Fuchs,
CFA
Lead
Portfolio Manager
Managed Fund
since 2016
Anders Myhran,
CFA
Portfolio
Manager
Managed Fund
since May 2019
Deborah
Vargo
Portfolio
Manager
Managed Fund
since 2017
Returns for Class A shares are shown
with and without the maximum initial sales charge of 3.00%. Returns for Class C shares are shown with and without the 1.00% contingent deferred sales charge for the first year only. The Fund’s other share classes are not subject to sales
charges and have limited eligibility. Please see the Fund’s prospectus for details. Performance for different share classes will vary based on differences in sales charges and fees associated with each share class. All results shown assume
reinvestment of distributions during the period. Returns do not reflect the deduction of taxes that a shareholder may pay on Fund distributions or on the redemption of Fund shares. Performance results reflect the effect of any fee waivers or
reimbursements of Fund expenses by Columbia Management Investment Advisers, LLC and/or any of its affiliates. Absent these fee waivers or expense reimbursement arrangements, performance results would have been lower.
The performance information shown represents past performance and
is not a guarantee of future results. The investment return and principal value of your investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than
the performance information shown. You may obtain performance information current to the most recent month-end by contacting your financial intermediary, visiting columbiathreadneedleus.com/investor/ or calling 800.345.6611.
| * | The returns shown for periods prior to the share class inception date (including returns for the Life of the Fund, if shown, which are since Fund inception) include the returns of the Fund’s oldest share class. These returns are adjusted to reflect any higher class-related operating expenses of the newer share classes, as applicable. Please visit columbiathreadneedleus.com/investor/investment-products/mutual-funds/appended-performance for more information. |
The Bloomberg Barclays 3–15 Year Blend Municipal Bond
Index is an unmanaged index that tracks the performance of municipal bonds issued after December 31, 1990, with remaining maturities between 2 and 17 years and at least $7 million in principal amount outstanding.
Indices are not available for investment, are not
professionally managed and do not reflect sales charges, fees, brokerage commissions, taxes or other expenses of investing. Securities in the Fund may not match those in an index.
|
Columbia
South Carolina Intermediate Municipal Bond Fund | Annual Report 2019
|
3 |
Table of Contents
Fund at a Glance
(continued)
Performance of a
hypothetical $10,000 investment (April 30, 2009 — April 30, 2019)
The chart above shows the
change in value of a hypothetical $10,000 investment in Class A shares of Columbia South Carolina Intermediate Municipal Bond Fund during the stated time period, and does not reflect the deduction of taxes that a shareholder may pay on Fund
distributions or on the redemption of Fund shares.
| Quality breakdown (%) (at April 30, 2019) | |
| AAA rating | 3.7 |
| AA rating | 37.6 |
| A rating | 54.6 |
| BBB rating | 1.7 |
| BB rating | 1.0 |
| Not rated | 1.4 |
| Total | 100.0 |
Percentages indicated are based
upon total fixed income investments.
Bond ratings apply
to the underlying holdings of the Fund and not the Fund itself and are divided into categories ranging from highest to lowest credit quality, determined by using the middle rating of Moody’s, S&P and Fitch, after dropping the highest and
lowest available ratings. When ratings are available from only two rating agencies, the lower rating is used. When a rating is available from only one rating agency, that rating is used. When a bond is not rated by any rating agency, it is
designated as “Not rated.” Credit quality ratings assigned by a rating agency are subjective opinions, not statements of fact, and are subject to change, including daily. The ratings assigned by credit rating agencies are but one of the
considerations that the Investment Manager and/or Fund’s subadviser incorporates into its credit analysis process, along with such other issuer-specific factors as cash flows, capital structure and leverage ratios, ability to de-leverage
(repay) through free cash flow, quality of management, market positioning and access to capital, as well as such security-specific factors as the terms of the security (e.g., interest rate and time to maturity) and the amount and type of any
collateral.
| 4 | Columbia South Carolina Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Manager Discussion of Fund Performance
For
the 12-month period that ended April 30, 2019, the Fund’s Class A shares returned 4.93% excluding sales charges, and its Institutional shares returned 5.19%. The Fund’s benchmark, the Bloomberg Barclays 3-15 Year Blend Municipal Bond
Index, returned 5.91% for the same time period. The Fund’s underperformance of its benchmark was largely the result of having a duration (interest-rate sensitivity) below that of the benchmark.
Market overview
Municipal bonds generated healthy gains in the 12-month
reporting period, with the bulk of the rally occurring from November 2018 onward. Municipals performed reasonably well from May through August on the strength of falling U.S. Treasury yields and the combination of strong investor demand and reduced
new-issue supply in the tax-exempt market. Conditions became less favorable in September 2018, when U.S. Treasury yields climbed on indications of continued strength in the U.S. economy and fears about inflation pressures that could result from a
trade war with China. The negative trend persisted in October, as yields continued to rise on concerns that the U.S. Federal Reserve (Fed) would take a more aggressive approach to raising interest rates in 2019 than investors had been
expecting.
Sentiment again shifted abruptly in early
November, causing yields to fall sharply through the end of 2018. The fixed-income markets rallied significantly due to signs of slowing global growth, volatility in the higher risk assets, and expectations that the Fed would in fact adopt a more
accommodative stance. In addition, various geopolitical factors, including uncertainty surrounding the U.S.-China trade dispute, Brexit negotiations, and the U.S. government shutdown, fueled a “flight to quality” into bonds. Municipals
rallied as a result, helping the major national indexes finish 2018 in positive territory.
The rally continued into the 2019, leading to the largest
first-quarter gain for the tax-exempt market since 2014. The first quarter of 2019 was also the sixth-best for municipals in the past 30 years. During this time, bonds were well supported by the backdrop of slow global growth and the increasingly
accommodative policies of the world’s major central banks. Supply-and-demand factors also remained highly favorable. Municipals rallied further in April 2019, helping them to post a solid gain for the full 12 months.
Longer term bonds outpaced shorter term issues in the period,
mirroring trends in the Treasury market, while lower quality bonds strongly outperformed their higher rated counterparts. The “risk-on” environment of January to April led to robust investor demand for higher risk assets, lifting the
returns of higher yielding bonds in all fixed-income categories.
South Carolina’s lower quality profile contributed to
outperformance
South Carolina’s intermediate
municipal market outperformed the broader national indexes during the period. The state’s market had a higher concentration in the lower rated end of the investment grade space, with A rated bonds making up 60% of the market — more than
double the national average. This was driven by local appropriation bonds and two public power issuers: Santee Copper and Piedmont Municipal Power Agency.
South Carolina’s economic fundamentals remained strong,
led by growth in the automotive and logistics sectors. The state was in a healthy financial position, with steady growth since the end of the last recession in 2009. Reserves were funded at their maximum levels, and revenues for the 2019 fiscal year
were about 7% above projections at the end of March due to robust individual income tax collections. Total collections for the first nine months were 5.3% higher than the same period in fiscal year 2018. However, statewide income levels were below
the U.S. average and the automotive sector remains vulnerable to a potential trade war.
Contributors and detractors
Given the outperformance for longer maturity and lower rated
investment-grade bonds, the Fund benefitted from its overweight in A rated issues and bonds with maturities of 12 years and above. At the sector level, the Fund’s holdings in longer dated local appropriation, hospitals, and education issues
— the three largest sector weightings in the portfolio — delivered returns well above the benchmark. All three areas benefited from a high representation of A rated securities.
The Fund’s allocation to bonds maturing in less than two
years detracted from performance, as these holdings produced much smaller gains than the benchmark. We decreased the size of this position as the period progressed, and we made a corresponding increase to the Fund’s holdings in bonds with
maturities of ten years and above. As part of this process, we reduced the Fund’s exposure to pre-refunded securities since they tend to have maturities of two years and less.
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Columbia
South Carolina Intermediate Municipal Bond Fund | Annual Report 2019
|
5 |
Table of Contents
Manager Discussion of Fund Performance
(continued)
At the sector level, the Fund’s investments in
transportation and special non-property issues underperformed their benchmark counterparts due to their shorter maturity and duration profiles. (Duration is a measure of interest-rate sensitivity.)
The Fund’s underweight to duration detracted from
performance at a time of falling yields. Opportunities to buy longer dated intermediate issues were limited, but we continued to look for investment candidates in this area.
Fund positioning
At the close of the period, we were fairly comfortable with
the overall interest rate environment due to the combination of muted inflation, the late stage of the economic expansion, and the Fed’s signals that it intends to remain on hold through the end of 2019. In addition, ongoing geopolitical
issues, including trade negotiations with China, Brexit uncertainty, and Washington infighting, continue to put downward pressure on interest rates. With this as the backdrop, our strategy remained consistent during the period. We targeted a roughly
neutral duration with more emphasis on the longer part of the intermediate yield curve. The average maturity of the bonds we added to the portfolio was about 16 years, while the average maturity of those we sold was approximately six years. The goal
of this shift was to reduce the potential effects of having a duration below that of the index. The Fund’s quality profile continued to favor the lower rated segment of the investment-grade market, with meaningful allocations to local
appropriations, hospitals, and education.
Fixed-income
securities present
issuer
default risk. The Fund invests substantially in
municipal securities
and will be affected by tax, legislative, regulatory, demographic or
political changes, as well as changes impacting a state’s financial, economic or other conditions. A relatively small number of tax-exempt issuers may necessitate the Fund investing more heavily in a single issuer and, therefore, be more
exposed to the risk of loss than a fund that invests more broadly. The value of the Fund’s portfolio may be more volatile than a more
geographically diversified
fund.
Prepayment and extension
risk exists because the timing of payments on a loan, bond or other investment may accelerate when interest rates fall or decelerate when interest rates rise which may reduce investment
opportunities and potential returns. A rise in
interest rates
may result in a price decline of fixed-income instruments held by the Fund, negatively impacting its performance and NAV. Falling rates may result
in the Fund investing in lower yielding debt instruments, lowering the Fund’s income and yield. These risks may be heightened for longer maturity and duration securities.
Non-investment-grade
(high-yield
or junk) securities present greater price volatility and more risk to principal and income than higher rated securities.
Market
risk may affect a single issuer, sector of the economy, industry or the market as
a whole. Federal and state
tax
rules apply to capital gain distributions and any gains or losses on sales. Income may be subject to state or local taxes.
Liquidity
risk is
associated with the difficulty of selling underlying investments at a desirable time or price. See the Fund’s prospectus for more information on these and other risks.
The views expressed in this report reflect the current views of
the respective parties. These views are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict, so actual outcomes and results may differ significantly from the views expressed.
These views are subject to change at any time based upon economic, market or other conditions and the respective parties disclaim any responsibility to update such views. These views may not be relied on as investment advice and, because investment
decisions for a Columbia fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any particular Columbia fund. References to specific securities should not be construed as a recommendation or
investment advice.
| 6 | Columbia South Carolina Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Understanding Your Fund’s Expenses
(Unaudited)
(Unaudited)
As an investor, you incur two types of costs. There are
shareholder transaction costs, which generally include sales charges on purchases and may include redemption fees. There are also ongoing fund costs, which generally include management fees, distribution and/or service fees, and other fund expenses.
The following information is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to help you compare these costs with the ongoing costs of investing in other mutual funds.
Analyzing your Fund’s expenses
To illustrate these ongoing costs, we have provided examples
and calculated the expenses paid by investors in each share class of the Fund during the period. The actual and hypothetical information in the table is based on an initial investment of $1,000 at the beginning of the period indicated and held for
the entire period. Expense information is calculated two ways and each method provides you with different information. The amount listed in the “Actual” column is calculated using the Fund’s actual operating expenses and total
return for the period. You may use the Actual information, together with the amount invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000
= 8.6), then multiply the results by the expenses paid during the period under the “Actual” column. The amount listed in the “Hypothetical” column assumes a 5% annual rate of return before expenses (which is not the
Fund’s actual return) and then applies the Fund’s actual expense ratio for the period to the hypothetical return. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end
of the period or the expenses you paid during the period. See “Compare with other funds” below for details on how to use the hypothetical data.
Compare with other funds
Since all mutual funds are required to include the same
hypothetical calculations about expenses in shareholder reports, you can use this information to compare the ongoing cost of investing in the Fund with other funds. To do so, compare the hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of other funds. As you compare hypothetical examples of other funds, it is important to note that hypothetical examples are meant to highlight the ongoing costs of investing in a fund only and do not reflect any
transaction costs, such as sales charges, or redemption or exchange fees. Therefore, the hypothetical calculations are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. If
transaction costs were included in these calculations, your costs would be higher.
Expenses paid during the period
are equal to the annualized expense ratio for each class as indicated above, multiplied by the average account value over the period and then multiplied by the number of days in the Fund’s most recent fiscal half year and divided by 365.
Expenses do not include fees and expenses incurred indirectly
by the Fund from its investment in underlying funds, including affiliated and non-affiliated pooled investment vehicles, such as mutual funds and exchange-traded funds.
Had Columbia Management Investment Advisers, LLC and/or certain
of its affiliates not waived/reimbursed certain fees and expenses, account value at the end of the period would have been reduced.
|
Columbia
South Carolina Intermediate Municipal Bond Fund | Annual Report 2019
|
7 |
Table of Contents
Portfolio of Investments
April 30, 2019
April 30, 2019
(Percentages represent value of investments compared to net
assets)
Investments in securities
The accompanying Notes to Financial Statements are an integral part
of this statement.
| 8 | Columbia South Carolina Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Portfolio of Investments
(continued)
April 30, 2019
April 30, 2019
The accompanying Notes to Financial Statements are an integral part
of this statement.
|
Columbia
South Carolina Intermediate Municipal Bond Fund | Annual Report 2019
|
9 |
Table of Contents
Portfolio of Investments
(continued)
April 30, 2019
April 30, 2019
The accompanying Notes to Financial Statements are an integral part
of this statement.
| 10 | Columbia South Carolina Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Portfolio of Investments
(continued)
April 30, 2019
April 30, 2019
| Money Market Funds 0.3% | ||
| Shares | Value ($) | |
| Dreyfus Tax-Exempt Cash Management Fund, Institutional Shares, 1.981% (e) | 358,342 | 358,342 |
|
Total
Money Market Funds
(Cost $358,342) |
358,342 | |
|
Total
Investments in Securities
(Cost: $98,673,411) |
102,517,743 | |
| Other Assets & Liabilities, Net | 1,200,282 | |
| Net Assets | 103,718,025 | |
The accompanying Notes to Financial Statements are an integral part
of this statement.
|
Columbia
South Carolina Intermediate Municipal Bond Fund | Annual Report 2019
|
11 |
Table of Contents
Portfolio of Investments
(continued)
April 30, 2019
April 30, 2019
Notes to Portfolio of Investments
| (a) | The Fund is entitled to receive principal and interest from the guarantor after a day or a week’s notice or upon maturity. The maturity date disclosed represents the final maturity. |
| (b) | Represents a variable rate security where the coupon rate adjusts on specified dates (generally daily or weekly) using the prevailing money market rate. The interest rate shown was the current rate as of April 30, 2019. |
| (c) | Represents privately placed and other securities and instruments exempt from Securities and Exchange Commission registration (collectively, private placements), such as Section 4(a)(2) and Rule 144A eligible securities, which are often sold only to qualified institutional buyers. The Fund may invest in private placements determined to be liquid as well as those determined to be illiquid. Private placements may be determined to be liquid under guidelines established by the Fund’s Board of Trustees. At April 30, 2019, the total value of these securities amounted to $1,937,855, which represents 1.87% of total net assets. |
| (d) | Zero coupon bond. |
| (e) | The rate shown is the seven-day current annualized yield at April 30, 2019. |
Abbreviation Legend
| AGM | Assured Guaranty Municipal Corporation |
| AMBAC | Ambac Assurance Corporation |
| BAM | Build America Mutual Assurance Co. |
| GNMA | Government National Mortgage Association |
Fair
value measurements
The Fund categorizes its fair value
measurements according to a three-level hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs by prioritizing that the most observable input be used when available. Observable inputs are those that market
participants would use in pricing an investment based on market data obtained from sources independent of the reporting entity. Unobservable inputs are those that reflect the Fund’s assumptions about the information market participants would
use in pricing an investment. An investment’s level within the fair value hierarchy is based on the lowest level of any input that is deemed significant to the asset’s or liability’s fair value measurement. The input levels are not
necessarily an indication of the risk or liquidity associated with investments at that level. For example, certain U.S. government securities are generally high quality and liquid, however, they are reflected as Level 2 because the inputs used to
determine fair value may not always be quoted prices in an active market.
Fair value inputs are summarized in the three broad levels
listed below:
| ■ | Level 1 — Valuations based on quoted prices for investments in active markets that the Fund has the ability to access at the measurement date. Valuation adjustments are not applied to Level 1 investments. |
| ■ | Level 2 — Valuations based on other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risks, etc.). |
| ■ | Level 3 — Valuations based on significant unobservable inputs (including the Fund’s own assumptions and judgment in determining the fair value of investments). |
Inputs that are used in determining fair value of an investment
may include price information, credit data, volatility statistics, and other factors. These inputs can be either observable or unobservable. The availability of observable inputs can vary between investments, and is affected by various factors such
as the type of investment, and the volume and level of activity for that investment or similar investments in the marketplace. The inputs will be considered by the Investment Manager, along with any other relevant factors in the calculation of an
investment’s fair value. The Fund uses prices and inputs that are current as of the measurement date, which may include periods of market dislocations. During these periods, the availability of prices and inputs may be reduced for many
investments. This condition could cause an investment to be reclassified between the various levels within the hierarchy.
Investments falling into the Level 3 category are primarily
supported by quoted prices from brokers and dealers participating in the market for those investments. However, these may be classified as Level 3 investments due to lack of market transparency and corroboration to support these quoted prices.
Additionally, valuation models may be used as the pricing source for any remaining investments classified as Level 3. These models may rely on one or more significant unobservable inputs and/or significant assumptions by the Investment Manager.
Inputs used in valuations may include, but are not limited to, financial statement analysis, capital account balances, discount rates and estimated cash flows, and comparable company data.
Under the direction of the Fund’s Board of Trustees (the
Board), the Investment Manager’s Valuation Committee (the Committee) is responsible for overseeing the valuation procedures approved by the Board. The Committee consists of voting and non-voting members from various groups within the
Investment Manager’s organization, including operations and accounting, trading and investments, compliance, risk management and legal.
The Committee meets at least monthly to review and approve
valuation matters, which may include a description of specific valuation determinations, data regarding pricing information received from approved pricing vendors and brokers and the results of Board-approved valuation control policies and
procedures (the Policies). The Policies address, among other things, instances when market quotations are or are not readily available, including recommendations of third party pricing vendors and a determination of appropriate pricing
methodologies; events that require specific valuation determinations and assessment of fair value techniques; securities with a potential for stale pricing, including those that are illiquid, restricted, or in default; and the effectiveness of third
party pricing vendors, including periodic reviews of vendors. The Committee meets more frequently, as needed, to discuss additional valuation matters, which may include the need to review back-testing results, review time-sensitive information or
approve related valuation actions. The Committee reports to the Board, with members of the Committee meeting with the Board at each of its regularly scheduled meetings to discuss valuation matters and actions during the period, similar to those
described earlier.
For investments categorized as Level
3, the Committee monitors information similar to that described above, which may include: (i) data specific to the issuer or comparable issuers, (ii) general market or specific sector news and (iii) quoted prices and specific or similar security
transactions. The Committee considers this data and any changes from prior periods in order to assess the reasonableness of observable and unobservable inputs, any assumptions or internal models used to value those securities and changes in fair
value. This data is also used to corroborate, when available, information received from approved pricing vendors and brokers. Various factors impact the frequency of monitoring this information (which may occur as often as daily). However, the
Committee may determine that changes to inputs, assumptions and models are not required as a result of the monitoring procedures performed.
The accompanying Notes to Financial Statements are an integral part of this
statement.
| 12 | Columbia South Carolina Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Portfolio of Investments
(continued)
April 30, 2019
April 30, 2019
Fair value
measurements
(continued)
The following table is a summary of the inputs used to value the Fund’s investments at April 30, 2019:
The following table is a summary of the inputs used to value the Fund’s investments at April 30, 2019:
|
Level
1
quoted prices in active markets for identical assets ($) |
Level
2
other significant observable inputs ($) |
Level
3
significant unobservable inputs ($) |
Total ($) | |
| Investments in Securities | ||||
| Floating Rate Notes | — | 2,000,000 | — | 2,000,000 |
| Municipal Bonds | — | 100,159,401 | — | 100,159,401 |
| Money Market Funds | 358,342 | — | — | 358,342 |
| Total Investments in Securities | 358,342 | 102,159,401 | — | 102,517,743 |
See the Portfolio of Investments for
all investment classifications not indicated in the table.
The Fund’s assets assigned to the Level 2 input category
are generally valued using the market approach, in which a security’s value is determined through reference to prices and information from market transactions for similar or identical assets.
There were no transfers of financial assets between levels
during the period.
The accompanying Notes to Financial Statements are an integral part of this
statement.
|
Columbia
South Carolina Intermediate Municipal Bond Fund | Annual Report 2019
|
13 |
Table of Contents
Statement of Assets and Liabilities
April 30, 2019
April 30, 2019
| Assets | |
| Investments in securities, at value | |
| Unaffiliated issuers (cost $98,673,411) | $102,517,743 |
| Cash | 276,744 |
| Receivable for: | |
| Investments sold | 15,250 |
| Capital shares sold | 123,256 |
| Interest | 1,305,397 |
| Expense reimbursement due from Investment Manager | 326 |
| Prepaid expenses | 574 |
| Total assets | 104,239,290 |
| Liabilities | |
| Payable for: | |
| Capital shares purchased | 151,919 |
| Distributions to shareholders | 205,805 |
| Management services fees | 1,335 |
| Distribution and/or service fees | 387 |
| Transfer agent fees | 13,914 |
| Compensation of board members | 108,221 |
| Audit fees | 36,295 |
| Other expenses | 3,389 |
| Total liabilities | 521,265 |
| Net assets applicable to outstanding capital stock | $103,718,025 |
| Represented by | |
| Paid in capital | 100,139,964 |
| Total distributable earnings (loss) (Note 2) | 3,578,061 |
| Total - representing net assets applicable to outstanding capital stock | $103,718,025 |
| Class A | |
| Net assets | $21,999,449 |
| Shares outstanding | 2,164,005 |
| Net asset value per share | $10.17 |
| Maximum sales charge | 3.00% |
| Maximum offering price per share (calculated by dividing the net asset value per share by 1.0 minus the maximum sales charge for Class A shares) | $10.48 |
| Advisor Class | |
| Net assets | $1,853,674 |
| Shares outstanding | 182,386 |
| Net asset value per share | $10.16 |
| Class C | |
| Net assets | $8,669,337 |
| Shares outstanding | 852,168 |
| Net asset value per share | $10.17 |
| Institutional Class | |
| Net assets | $70,343,284 |
| Shares outstanding | 6,916,114 |
| Net asset value per share | $10.17 |
| Institutional 3 Class | |
| Net assets | $852,281 |
| Shares outstanding | 83,505 |
| Net asset value per share | $10.21 |
The accompanying Notes to Financial Statements are an integral part of this
statement.
| 14 | Columbia South Carolina Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Statement of Operations
Year Ended April 30, 2019
Year Ended April 30, 2019
| Net investment income | |
| Income: | |
| Dividends — unaffiliated issuers | $26,486 |
| Interest | 3,430,947 |
| Total income | 3,457,433 |
| Expenses: | |
| Management services fees | 511,026 |
| Distribution and/or service fees | |
| Class A | 54,556 |
| Class C | 96,460 |
| Transfer agent fees | |
| Class A | 28,155 |
| Advisor Class | 2,346 |
| Class C | 12,430 |
| Institutional Class | 96,239 |
| Institutional 3 Class | 144 |
| Compensation of board members | 15,176 |
| Custodian fees | 2,033 |
| Printing and postage fees | 11,418 |
| Registration fees | 3,724 |
| Audit fees | 33,900 |
| Legal fees | 7,821 |
| Compensation of chief compliance officer | 23 |
| Other | 9,934 |
| Total expenses | 885,385 |
| Fees waived or expenses reimbursed by Investment Manager and its affiliates | (127,521) |
| Expense reduction | (20) |
| Total net expenses | 757,844 |
| Net investment income | 2,699,589 |
| Realized and unrealized gain (loss) — net | |
| Net realized gain (loss) on: | |
| Investments — unaffiliated issuers | (6,786) |
| Net realized loss | (6,786) |
| Net change in unrealized appreciation (depreciation) on: | |
| Investments — unaffiliated issuers | 2,501,025 |
| Net change in unrealized appreciation (depreciation) | 2,501,025 |
| Net realized and unrealized gain | 2,494,239 |
| Net increase in net assets resulting from operations | $5,193,828 |
The accompanying Notes to Financial Statements are an
integral part of this statement.
|
Columbia
South Carolina Intermediate Municipal Bond Fund | Annual Report 2019
|
15 |
Table of Contents
Statement of Changes in Net Assets
|
Year
Ended
April 30, 2019 |
Year
Ended
April 30, 2018 |
|
| Operations | ||
| Net investment income | $2,699,589 | $2,985,611 |
| Net realized gain (loss) | (6,786) | 28,612 |
| Net change in unrealized appreciation (depreciation) | 2,501,025 | (2,297,426) |
| Net increase in net assets resulting from operations | 5,193,828 | 716,797 |
| Distributions to shareholders | ||
| Net investment income and net realized gains | ||
| Class A | (551,729) | |
| Advisor Class | (50,398) | |
| Class C | (171,766) | |
| Institutional Class | (2,078,507) | |
| Institutional 3 Class | (22,190) | |
| Net investment income | ||
| Class A | (575,811) | |
| Advisor Class | (41,779) | |
| Class B | (44) | |
| Class C | (230,029) | |
| Institutional Class | (2,357,405) | |
| Institutional 3 Class | (13,721) | |
| Total distributions to shareholders (Note 2) | (2,874,590) | (3,218,789) |
| Decrease in net assets from capital stock activity | (12,914,590) | (3,335,695) |
| Total decrease in net assets | (10,595,352) | (5,837,687) |
| Net assets at beginning of year | 114,313,377 | 120,151,064 |
| Net assets at end of year | $103,718,025 | $114,313,377 |
| Undistributed net investment income | $70,635 | $245,636 |
The accompanying Notes to Financial Statements are an
integral part of this statement.
| 16 | Columbia South Carolina Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Statement of Changes in Net Assets
(continued)
| Year Ended | Year Ended | |||
| April 30, 2019 | April 30, 2018 | |||
| Shares | Dollars ($) | Shares | Dollars ($) | |
| Capital stock activity | ||||
| Class A | ||||
| Subscriptions | 532,295 | 5,316,491 | 494,660 | 5,002,483 |
| Distributions reinvested | 43,259 | 432,321 | 44,160 | 448,031 |
| Redemptions | (730,792) | (7,277,167) | (334,897) | (3,400,794) |
| Net increase (decrease) | (155,238) | (1,528,355) | 203,923 | 2,049,720 |
| Advisor Class | ||||
| Subscriptions | 28,762 | 285,176 | 95,247 | 968,400 |
| Distributions reinvested | 5,016 | 50,131 | 4,102 | 41,498 |
| Redemptions | (51,123) | (506,948) | (18,261) | (183,610) |
| Net increase (decrease) | (17,345) | (171,641) | 81,088 | 826,288 |
| Class B | ||||
| Redemptions | — | — | (965) | (9,865) |
| Net decrease | — | — | (965) | (9,865) |
| Class C | ||||
| Subscriptions | 44,787 | 447,851 | 54,342 | 552,727 |
| Distributions reinvested | 13,014 | 130,026 | 17,748 | 180,346 |
| Redemptions | (287,479) | (2,874,005) | (337,944) | (3,434,290) |
| Net decrease | (229,678) | (2,296,128) | (265,854) | (2,701,217) |
| Institutional Class | ||||
| Subscriptions | 1,636,464 | 16,352,511 | 1,366,064 | 13,824,080 |
| Distributions reinvested | 51,777 | 517,362 | 60,784 | 617,249 |
| Redemptions | (2,594,063) | (25,878,074) | (1,845,954) | (18,703,040) |
| Net decrease | (905,822) | (9,008,201) | (419,106) | (4,261,711) |
| Institutional 3 Class | ||||
| Subscriptions | 34,450 | 348,027 | 83,639 | 859,459 |
| Distributions reinvested | 2,183 | 21,904 | 1,326 | 13,420 |
| Redemptions | (27,986) | (280,196) | (11,094) | (111,789) |
| Net increase | 8,647 | 89,735 | 73,871 | 761,090 |
| Total net decrease | (1,299,436) | (12,914,590) | (327,043) | (3,335,695) |
The accompanying Notes to Financial Statements are an integral part of this
statement.
|
Columbia
South Carolina Intermediate Municipal Bond Fund | Annual Report 2019
|
17 |
Table of Contents
Financial Highlights
The
following table is intended to help you understand the Fund’s financial performance. Certain information reflects financial results for a single share of a class held for the periods shown. Per share net investment income (loss) amounts are
calculated based on average shares outstanding during the period. Total return assumes reinvestment of all dividends and distributions, if any. Total return does not reflect payment of sales charges, if any. Total return and portfolio turnover are
not annualized for periods of less than one year. The portfolio turnover rate is calculated without regard to purchase and sales transactions of short-term instruments and certain derivatives, if any. If such transactions were included, the
Fund’s portfolio turnover rate may be higher.
|
Net
asset value,
beginning of period |
Net
investment income |
Net
realized and unrealized gain (loss) |
Total
from
investment operations |
Distributions
from net investment income |
Distributions
from net realized gains |
Total
distributions to shareholders |
|
| Class A | |||||||
| Year Ended 4/30/2019 | $9.94 | 0.24 | 0.24 | 0.48 | (0.25) | — | (0.25) |
| Year Ended 4/30/2018 | $10.16 | 0.25 | (0.20) | 0.05 | (0.27) | — | (0.27) |
| Year Ended 4/30/2017 | $10.55 | 0.25 | (0.35) | (0.10) | (0.28) | (0.01) | (0.29) |
| Year Ended 4/30/2016 | $10.44 | 0.28 | 0.16 | 0.44 | (0.30) | (0.03) | (0.33) |
| Year Ended 4/30/2015 | $10.49 | 0.30 | 0.02 (d) | 0.32 | (0.30) | (0.07) | (0.37) |
| Advisor Class | |||||||
| Year Ended 4/30/2019 | $9.94 | 0.26 | 0.24 | 0.50 | (0.28) | — | (0.28) |
| Year Ended 4/30/2018 | $10.15 | 0.27 | (0.19) | 0.08 | (0.29) | — | (0.29) |
| Year Ended 4/30/2017 | $10.54 | 0.28 | (0.36) | (0.08) | (0.30) | (0.01) | (0.31) |
| Year Ended 4/30/2016 | $10.43 | 0.30 | 0.17 | 0.47 | (0.33) | (0.03) | (0.36) |
| Year Ended 4/30/2015 | $10.49 | 0.33 | 0.00 (d),(e) | 0.33 | (0.32) | (0.07) | (0.39) |
| Class C | |||||||
| Year Ended 4/30/2019 | $9.94 | 0.16 | 0.25 | 0.41 | (0.18) | — | (0.18) |
| Year Ended 4/30/2018 | $10.16 | 0.17 | (0.20) | (0.03) | (0.19) | — | (0.19) |
| Year Ended 4/30/2017 | $10.56 | 0.18 | (0.37) | (0.19) | (0.20) | (0.01) | (0.21) |
| Year Ended 4/30/2016 | $10.44 | 0.20 | 0.18 | 0.38 | (0.23) | (0.03) | (0.26) |
| Year Ended 4/30/2015 | $10.50 | 0.22 | 0.01 (d) | 0.23 | (0.22) | (0.07) | (0.29) |
| Institutional Class | |||||||
| Year Ended 4/30/2019 | $9.94 | 0.26 | 0.25 | 0.51 | (0.28) | — | (0.28) |
| Year Ended 4/30/2018 | $10.16 | 0.27 | (0.20) | 0.07 | (0.29) | — | (0.29) |
| Year Ended 4/30/2017 | $10.56 | 0.28 | (0.37) | (0.09) | (0.30) | (0.01) | (0.31) |
| Year Ended 4/30/2016 | $10.44 | 0.31 | 0.17 | 0.48 | (0.33) | (0.03) | (0.36) |
| Year Ended 4/30/2015 | $10.50 | 0.33 | 0.00 (d),(e) | 0.33 | (0.32) | (0.07) | (0.39) |
The accompanying Notes to Financial Statements are an
integral part of this statement.
| 18 | Columbia South Carolina Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Financial Highlights
(continued)
|
Net
asset value, end of period |
Total
return |
Total
gross
expense ratio to average net assets (a) |
Total
net
expense ratio to average net assets (a),(b) |
Net
investment
income ratio to average net assets |
Portfolio
turnover |
Net
assets, end of period (000’s) |
|
| Class A | |||||||
| Year Ended 4/30/2019 | $10.17 | 4.93% | 0.93% | 0.81% (c) | 2.37% | 9% | $21,999 |
| Year Ended 4/30/2018 | $9.94 | 0.43% | 0.93% | 0.81% (c) | 2.41% | 7% | $23,050 |
| Year Ended 4/30/2017 | $10.16 | (0.98%) | 0.98% | 0.81% (c) | 2.45% | 11% | $21,486 |
| Year Ended 4/30/2016 | $10.55 | 4.33% | 0.99% | 0.81% | 2.69% | 16% | $21,972 |
| Year Ended 4/30/2015 | $10.44 | 3.05% | 1.00% | 0.81% | 2.85% | 16% | $23,975 |
| Advisor Class | |||||||
| Year Ended 4/30/2019 | $10.16 | 5.09% | 0.68% | 0.56% (c) | 2.62% | 9% | $1,854 |
| Year Ended 4/30/2018 | $9.94 | 0.78% | 0.68% | 0.56% (c) | 2.66% | 7% | $1,984 |
| Year Ended 4/30/2017 | $10.15 | (0.74%) | 0.73% | 0.56% (c) | 2.71% | 11% | $1,205 |
| Year Ended 4/30/2016 | $10.54 | 4.59% | 0.74% | 0.56% | 2.93% | 16% | $758 |
| Year Ended 4/30/2015 | $10.43 | 3.21% | 0.75% | 0.56% | 3.11% | 16% | $703 |
| Class C | |||||||
| Year Ended 4/30/2019 | $10.17 | 4.14% | 1.68% | 1.56% (c) | 1.62% | 9% | $8,669 |
| Year Ended 4/30/2018 | $9.94 | (0.32%) | 1.68% | 1.56% (c) | 1.66% | 7% | $10,759 |
| Year Ended 4/30/2017 | $10.16 | (1.81%) | 1.73% | 1.56% (c) | 1.70% | 11% | $13,698 |
| Year Ended 4/30/2016 | $10.56 | 3.65% | 1.74% | 1.56% | 1.94% | 16% | $15,051 |
| Year Ended 4/30/2015 | $10.44 | 2.18% | 1.75% | 1.56% | 2.10% | 16% | $15,677 |
| Institutional Class | |||||||
| Year Ended 4/30/2019 | $10.17 | 5.19% | 0.68% | 0.56% (c) | 2.62% | 9% | $70,343 |
| Year Ended 4/30/2018 | $9.94 | 0.68% | 0.68% | 0.56% (c) | 2.66% | 7% | $77,773 |
| Year Ended 4/30/2017 | $10.16 | (0.83%) | 0.73% | 0.56% (c) | 2.70% | 11% | $83,743 |
| Year Ended 4/30/2016 | $10.56 | 4.69% | 0.74% | 0.56% | 2.93% | 16% | $105,200 |
| Year Ended 4/30/2015 | $10.44 | 3.21% | 0.75% | 0.56% | 3.10% | 16% | $94,697 |
The accompanying Notes to Financial Statements are an
integral part of this statement.
|
Columbia
South Carolina Intermediate Municipal Bond Fund | Annual Report 2019
|
19 |
Table of Contents
Financial Highlights
(continued)
|
Net
asset value,
beginning of period |
Net
investment income |
Net
realized and unrealized gain (loss) |
Total
from
investment operations |
Distributions
from net investment income |
Distributions
from net realized gains |
Total
distributions to shareholders |
|
| Institutional 3 Class | |||||||
| Year Ended 4/30/2019 | $9.98 | 0.27 | 0.25 | 0.52 | (0.29) | — | (0.29) |
| Year Ended 4/30/2018 | $10.19 | 0.28 | (0.19) | 0.09 | (0.30) | — | (0.30) |
| Year Ended 4/30/2017 (f) | $10.13 | 0.05 | 0.06 (d) | 0.11 | (0.05) | — | (0.05) |
| Notes to Financial Highlights | |
| (a) | In addition to the fees and expenses that the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of any other funds in which it invests. Such indirect expenses are not included in the Fund’s reported expense ratios. |
| (b) | Total net expenses include the impact of certain fee waivers/expense reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
| (c) | The benefits derived from expense reductions had an impact of less than 0.01%. |
| (d) | Calculation of the net gain (loss) per share (both realized and unrealized) does not correlate to the aggregate realized and unrealized gain (loss) presented in the Statement of Operations due to the timing of subscriptions and redemptions of Fund shares in relation to fluctuations in the market value of the portfolio. |
| (e) | Rounds to zero. |
| (f) | Institutional 3 Class shares commenced operations on March 1, 2017. Per share data and total return reflect activity from that date. |
| (g) | Annualized. |
The accompanying Notes to Financial Statements are an
integral part of this statement.
| 20 | Columbia South Carolina Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Financial Highlights
(continued)
|
Net
asset value, end of period |
Total
return |
Total
gross
expense ratio to average net assets (a) |
Total
net
expense ratio to average net assets (a),(b) |
Net
investment
income ratio to average net assets |
Portfolio
turnover |
Net
assets, end of period (000’s) |
|
| Institutional 3 Class | |||||||
| Year Ended 4/30/2019 | $10.21 | 5.30% | 0.57% | 0.45% | 2.73% | 9% | $852 |
| Year Ended 4/30/2018 | $9.98 | 0.91% | 0.56% | 0.45% | 2.79% | 7% | $747 |
| Year Ended 4/30/2017 (f) | $10.19 | 1.09% | 0.57% (g) | 0.43% (g) | 2.85% (g) | 11% | $10 |
The accompanying Notes to Financial Statements are an integral part of this
statement.
|
Columbia
South Carolina Intermediate Municipal Bond Fund | Annual Report 2019
|
21 |
Table of Contents
Notes to Financial Statements
April 30, 2019
April 30, 2019
Note 1. Organization
Columbia South Carolina Intermediate Municipal Bond Fund
(formerly known as Columbia AMT-Free South Carolina Intermediate Muni Bond Fund) (the Fund), a series of Columbia Funds Series Trust (the Trust), is a diversified fund. The Trust is registered under the Investment Company Act of 1940, as amended
(the 1940 Act), as an open-end management investment company organized as a Delaware statutory trust.
Effective May 14, 2019, Columbia AMT-Free South Carolina
Intermediate Muni Bond Fund was renamed Columbia South Carolina Intermediate Municipal Bond Fund.
Fund shares
The Trust may issue an unlimited number of shares (without par
value). Although all share classes generally have identical voting, dividend and liquidation rights, each share class votes separately when required by the Trust’s organizational documents or by law. Different share classes pay different
distribution amounts to the extent the expenses of such share classes differ, and distributions in liquidation will be proportional to the net asset value of each share class. Each share class has its own expense and sales charge structure. The Fund
offers each of the share classes identified below.
Class
A shares are subject to a maximum front-end sales charge of 3.00% based on the initial investment amount. Class A shares purchased without an initial sales charge are subject to a contingent deferred sales charge (CDSC) of 0.75% on certain
investments of $500,000 or more if redeemed within 12 months after purchase.
Advisor Class shares are not subject to sales charges and are
generally available only to omnibus retirement plans and certain investors as described in the Fund’s prospectus.
Class C shares are subject to a 1.00% CDSC on shares redeemed
within 12 months after purchase. Effective July 1, 2018, Class C shares automatically convert to Class A shares of the same Fund in the month of or the month following the 10-year anniversary of the Class C shares purchase date.
Institutional Class shares are not subject to sales charges
and are generally available only to eligible investors, which are subject to different investment minimums as described in the Fund’s prospectus.
Institutional 3 Class shares are not subject to sales charges
and are available to institutional and certain other investors as described in the Fund’s prospectus.
Note 2. Summary of significant accounting
policies
Basis of preparation
The Fund is an investment company that applies the accounting
and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946,
Financial Services - Investment Companies
(ASC 946). The financial statements are prepared
in accordance with U.S. generally accepted accounting principles (GAAP), which requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
The following is a summary of significant accounting policies
followed by the Fund in the preparation of its financial statements.
Security valuation
Debt securities generally are valued by pricing services
approved by the Board of Trustees based upon market transactions for normal, institutional-size trading units of similar securities. The services may use various pricing techniques that take into account, as applicable, factors such as yield,
quality, coupon rate, maturity, type of issue, trading characteristics and other data, as well as approved independent broker-dealer quotes. Debt securities for which quotations are not readily available or
| 22 | Columbia South Carolina Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Notes to Financial Statements
(continued)
April 30, 2019
April 30, 2019
not believed to be
reflective of market value may also be valued based upon a bid quote from an approved independent broker-dealer. Debt securities maturing in 60 days or less are valued primarily at amortized cost value, unless this method results in a valuation that
management believes does not approximate market value.
Investments in open-end investment companies, including money
market funds, are valued at their latest net asset value.
Investments for which market quotations are not readily
available, or that have quotations which management believes are not reflective of market value or reliable, are valued at fair value as determined in good faith under procedures approved by and under the general supervision of the Board of
Trustees. If a security or class of securities (such as foreign securities) is valued at fair value, such value is likely to be different from the quoted or published price for the security.
The determination of fair value often requires significant
judgment. To determine fair value, management may use assumptions including but not limited to future cash flows and estimated risk premiums. Multiple inputs from various sources may be used to determine fair value.
GAAP requires disclosure regarding the inputs and valuation
techniques used to measure fair value and any changes in valuation inputs or techniques. In addition, investments shall be disclosed by major category. This information is disclosed following the Fund’s Portfolio of Investments.
Security transactions
Security transactions are accounted for on the trade date.
Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes.
Income recognition
Interest income is recorded on an accrual basis. Market
premiums and discounts, including original issue discounts, are amortized and accreted, respectively, over the expected life of the security on all debt securities, unless otherwise noted.
The Fund may place a debt security on non-accrual status and
reduce related interest income when it becomes probable that the interest will not be collected and the amount of uncollectible interest can be reasonably estimated. A defaulted debt security is removed from non-accrual status when the issuer
resumes interest payments or when collectibility of interest is reasonably assured.
Dividend income is recorded on the ex-dividend date.
Expenses
General expenses of the Trust are allocated to the Fund and
other funds of the Trust based upon relative net assets or other expense allocation methodologies determined by the nature of the expense. Expenses directly attributable to the Fund are charged to the Fund. Expenses directly attributable to a
specific class of shares are charged to that share class.
Determination of class net asset value
All income, expenses (other than class-specific expenses,
which are charged to that share class, as shown in the Statement of Operations) and realized and unrealized gains (losses) are allocated to each class of the Fund on a daily basis, based on the relative net assets of each class, for purposes of
determining the net asset value of each class.
Federal
income tax status
The Fund intends to qualify each year
as a regulated investment company under Subchapter M of the Internal Revenue Code, as amended, and will distribute substantially all of its net tax-exempt and investment company taxable income and net capital gain, if any, for its tax year, and as
such will not be subject to federal income taxes. In addition, the Fund intends to distribute in each calendar year substantially all of its ordinary income, capital gain net income and certain other amounts, if any, such that the Fund should not be
subject to federal excise tax. Therefore, no federal income or excise tax provision is recorded.
|
Columbia
South Carolina Intermediate Municipal Bond Fund | Annual Report 2019
|
23 |
Table of Contents
Notes to Financial Statements
(continued)
April 30, 2019
April 30, 2019
Distributions to shareholders
Distributions from net investment income, if any, are declared
daily and paid monthly. Net realized capital gains, if any, are distributed at least annually. Income distributions and capital gain distributions are determined in accordance with federal income tax regulations, which may differ from GAAP.
Guarantees and indemnifications
Under the Trust’s organizational documents and, in some
cases, by contract, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust or its funds. In addition, certain of the Fund’s contracts with its service providers contain
general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown since the amount of any future claims that may be made against the Fund cannot be determined, and the Fund has no historical basis for predicting
the likelihood of any such claims.
Recent accounting
pronouncements
Accounting Standards Update 2017-08
Premium Amortization on Purchased Callable Debt Securities
In March 2017, the Financial Accounting Standards Board issued
Accounting Standards Update (ASU) No. 2017-08 Premium Amortization on Purchased Callable Debt Securities. ASU No. 2017-08 updates the accounting standards to shorten the amortization period for certain purchased callable debt securities, held at a
premium, to be amortized to the earliest call date. The update applies to securities with explicit, noncontingent call features that are callable at fixed prices and on preset dates. The standard is effective for annual periods beginning after
December 15, 2018 and interim periods within those fiscal years. Management does not expect the implementation of this guidance to have a material impact on the financial statement amounts and footnote disclosures.
Accounting Standards Update 2018-13 Disclosure Framework -
Changes to the Disclosure Requirements for Fair Value Measurement
In August 2018, the Financial Accounting Standards Board
issued Accounting Standards Update (ASU) No. 2018-13 Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. ASU No. 2018-13, in addition to other modifications and additions, removes the requirement to disclose the
amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy and the policy for the timing of transfers between levels. The standard is effective for annual periods beginning after December 15, 2019 and interim periods
within those fiscal years. At this time, management is evaluating the implication of this guidance and the impact it will have on the financial statement disclosures, if any.
Disclosure Update and Simplification
In September 2018, the Securities and Exchange Commission
(SEC) released Final Rule 33-10532, Disclosure Update and Simplification, which amends certain financial statement disclosure requirements that the SEC determined to be redundant, outdated, or superseded in light of other SEC disclosure
requirements, GAAP, or changes in the information environment. As a result of the amendments, management implemented disclosure changes which included removing the components of distributable earnings presented on the Statement of Assets and
Liabilities and combining income and gain distributions paid to shareholders as presented on the Statement of Changes in Net Assets. Any values presented to meet prior year requirements were left unchanged. The amendments had no effect on the
Fund’s net assets or results of operation.
Note
3. Fees and other transactions with affiliates
Management services fees
The Fund has entered into a Management Agreement with Columbia
Management Investment Advisers, LLC (the Investment Manager), a wholly-owned subsidiary of Ameriprise Financial, Inc. (Ameriprise Financial). Under the Management Agreement, the Investment Manager provides the Fund with investment research and
advice, as well as administrative and accounting services. The management services fee is an annual fee that is equal to a percentage of the Fund’s daily net assets that declines from 0.47% to 0.31% as the Fund’s net assets increase. The
effective management services fee rate for the year ended April 30, 2019 was 0.47% of the Fund’s average daily net assets.
| 24 | Columbia South Carolina Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Notes to Financial Statements
(continued)
April 30, 2019
April 30, 2019
Compensation of board members
Members of the Board of Trustees who are not officers or
employees of the Investment Manager or Ameriprise Financial are compensated for their services to the Fund as disclosed in the Statement of Operations. Under a Deferred Compensation Plan (the Deferred Plan), these members of the Board of Trustees
may elect to defer payment of up to 100% of their compensation. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of certain funds managed by the Investment Manager. The Fund’s liability for these
amounts is adjusted for market value changes and remains in the Fund until distributed in accordance with the Deferred Plan. All amounts payable under the Deferred Plan constitute a general unsecured obligation of the Fund.
Compensation of Chief Compliance Officer
The Board of Trustees has appointed a Chief Compliance Officer
to the Fund in accordance with federal securities regulations. As disclosed in the Statement of Operations, a portion of the Chief Compliance Officer’s total compensation is allocated to the Fund, along with other allocations to affiliated
registered investment companies managed by the Investment Manager and its affiliates, based on relative net assets.
Transfer agency fees
Under a Transfer and Dividend Disbursing Agent Agreement,
Columbia Management Investment Services Corp. (the Transfer Agent), an affiliate of the Investment Manager and a wholly-owned subsidiary of Ameriprise Financial, is responsible for providing transfer agency services to the Fund. The Transfer Agent
has contracted with DST Asset Manager Solutions, Inc. (DST) to serve as sub-transfer agent. The Transfer Agent pays the fees of DST for services as sub-transfer agent and DST is not entitled to reimbursement for such fees from the Fund (with the
exception of out-of-pocket fees).
The Fund pays the
Transfer Agent a monthly transfer agency fee based on the number or the average value of accounts, depending on the type of account. In addition, the Fund pays the Transfer Agent a fee for shareholder services based on the number of accounts or on a
percentage of the average aggregate value of the Fund’s shares maintained in omnibus accounts up to the lesser of the amount charged by the financial intermediary or a cap established by the Board of Trustees from time to time.
The Transfer Agent also receives compensation from the Fund
for various shareholder services and reimbursements for certain out-of-pocket fees. Total transfer agency fees for Institutional 3 Class shares are subject to an annual limitation of not more than 0.02% of the average daily net assets attributable
to Institutional 3 Class shares.
For the year ended
April 30, 2019, the Fund’s effective transfer agency fee rates as a percentage of average daily net assets of each class were as follows:
| Effective rate (%) | |
| Class A | 0.13 |
| Advisor Class | 0.13 |
| Class C | 0.13 |
| Institutional Class | 0.13 |
| Institutional 3 Class | 0.02 |
An annual minimum account balance
fee of $20 may apply to certain accounts with a value below the applicable share class’s initial minimum investment requirements to reduce the impact of small accounts on transfer agency fees. These minimum account balance fees are remitted to
the Fund and recorded as part of expense reductions in the Statement of Operations. For the year ended April 30, 2019, these minimum account balance fees reduced total expenses of the Fund by $20.
Distribution and service fees
The Fund has entered into an agreement with Columbia
Management Investment Distributors, Inc. (the Distributor), an affiliate of the Investment Manager and a wholly-owned subsidiary of Ameriprise Financial, for distribution and shareholder services. The Board of Trustees has approved, and the Fund has
adopted, distribution and shareholder service plans (the
|
Columbia
South Carolina Intermediate Municipal Bond Fund | Annual Report 2019
|
25 |
Table of Contents
Notes to Financial Statements
(continued)
April 30, 2019
April 30, 2019
Plans) applicable
to certain share classes, which set the distribution and service fees for the Fund. These fees are calculated daily and are intended to compensate the Distributor and/or eligible selling and/or servicing agents for selling shares of the Fund and
providing services to investors.
Under the Plans, the
Fund pays a monthly combined distribution and service fee to the Distributor at the maximum annual rate of 0.25% of the average daily net assets attributable to Class A shares of the Fund. Also under the Plans, the Fund pays a monthly service fee to
the Distributor at the maximum annual rate of 0.25% of the average daily net assets attributable to Class C shares of the Fund and a monthly distribution fee to the Distributor at the maximum annual rate of 0.75% of the average daily net assets
attributable to Class C shares of the Fund.
Sales charges
(unaudited)
Sales charges, including front-end charges
and CDSCs, received by the Distributor for distributing Fund shares for the year ended April 30, 2019, if any, are listed below:
| Amount ($) | |
| Class A | 2,512 |
| Class C | 29 |
Expenses waived/reimbursed by the
Investment Manager and its affiliates
The Investment
Manager and certain of its affiliates have contractually agreed to waive fees and/or reimburse expenses (excluding certain fees and expenses described below) for the period(s) disclosed below, unless sooner terminated at the sole discretion of the
Board of Trustees, so that the Fund’s net operating expenses, after giving effect to fees waived/expenses reimbursed and any balance credits and/or overdraft charges from the Fund’s custodian, do not exceed the following annual rate(s)
as a percentage of the class’ average daily net assets:
|
Fee
rate(s) contractual
through August 31, 2019 |
|
| Class A | 0.81% |
| Advisor Class | 0.56 |
| Class C | 1.56 |
| Institutional Class | 0.56 |
| Institutional 3 Class | 0.45 |
Under the agreement governing
these fee waivers and/or expense reimbursement arrangements, the following fees and expenses are excluded from the waiver/reimbursement commitment, and therefore will be paid by the Fund, if applicable: taxes (including foreign transaction taxes),
expenses associated with investments in affiliated and non-affiliated pooled investment vehicles (including mutual funds and exchange-traded funds), transaction costs and brokerage commissions, costs related to any securities lending program,
dividend expenses associated with securities sold short, inverse floater program fees and expenses, transaction charges and interest on borrowed money, interest, infrequent and/or unusual expenses and any other expenses the exclusion of which is
specifically approved by the Board of Trustees. This agreement may be modified or amended only with approval from the Investment Manager, certain of its affiliates and the Fund. Any fees waived and/or expenses reimbursed under the expense
reimbursement arrangements described above are not recoverable by the Investment Manager or its affiliates in future periods.
Note 4. Federal tax information
The timing and character of income and capital gain
distributions are determined in accordance with income tax regulations, which may differ from GAAP because of temporary or permanent book to tax differences.
At April 30, 2019, these differences were primarily due to
differing treatment for deferral/reversal of wash sale losses, capital loss carryforwards, trustees’ deferred compensation and distributions. To the extent these differences were permanent, reclassifications were made among the components of
the Fund’s net assets. Temporary differences do not require reclassifications.
| 26 | Columbia South Carolina Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Notes to Financial Statements
(continued)
April 30, 2019
April 30, 2019
The
Fund did not have any permanent differences; therefore, no reclassifications were made.
The tax character of distributions paid during the years
indicated was as follows:
| Year Ended April 30, 2019 | Year Ended April 30, 2018 | ||||||
|
Ordinary
income ($) |
Tax-exempt
income ($) |
Long-term
capital gains ($) |
Total ($) |
Ordinary
income ($) |
Tax-exempt
income ($) |
Long-term
capital gains ($) |
Total ($) |
| — | 2,874,590 | — | 2,874,590 | 22 | 3,218,767 | — | 3,218,789 |
Short-term capital gain
distributions, if any, are considered ordinary income distributions for tax purposes.
At April 30, 2019, the components of distributable earnings on
a tax basis were as follows:
|
Undistributed
ordinary income ($) |
Undistributed
tax-
exempt income ($) |
Undistributed
long-term capital gains ($) |
Capital
loss
carryforwards ($) |
Net
unrealized
appreciation ($) |
| — | 383,812 | — | (270,491) | 3,777,917 |
At April 30, 2019, the cost of all
investments for federal income tax purposes along with the aggregate gross unrealized appreciation and depreciation based on that cost was:
|
Federal
tax cost ($) |
Gross
unrealized
appreciation ($) |
Gross
unrealized
(depreciation) ($) |
Net
unrealized
appreciation ($) |
| 98,739,826 | 3,835,202 | (57,285) | 3,777,917 |
Tax cost of investments and
unrealized appreciation/(depreciation) may also include timing differences that do not constitute adjustments to tax basis.
The following capital loss carryforwards, determined at April
30, 2019, may be available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code. Capital loss carryforwards with no expiration are required to be utilized prior
to any capital losses which carry an expiration date. As a result of this ordering rule, capital loss carryforwards which carry an expiration date may be more likely to expire unused. In addition, for the year ended April 30, 2019, capital loss
carryforwards utilized and expired unused, if any, were as follows:
|
No
expiration
short-term ($) |
No
expiration
long-term ($) |
Total ($) | Utilized ($) | Expired ($) |
| 263,447 | 7,044 | 270,491 | — | — |
Management of the Fund has
concluded that there are no significant uncertain tax positions in the Fund that would require recognition in the financial statements. However, management’s conclusion may be subject to review and adjustment at a later date based on factors
including, but not limited to, new tax laws, regulations, and administrative interpretations (including relevant court decisions). Generally, the Fund’s federal tax returns for the prior three fiscal years remain subject to examination by the
Internal Revenue Service.
Note 5. Portfolio
information
The cost of purchases and proceeds from
sales of securities, excluding short-term investments and derivatives, if any, aggregated to $9,188,545 and $18,930,774, respectively, for the year ended April 30, 2019. The amount of purchase and sale activity impacts the portfolio turnover rate
reported in the Financial Highlights.
Note
6. Interfund lending
Pursuant to an exemptive
order granted by the Securities and Exchange Commission, the Fund participates in a program (the Interfund Program) allowing each participating Columbia Fund (each, a Participating Fund) to lend money directly to and, except for closed-end funds and
money market funds, borrow money directly from other Participating Funds for temporary purposes. The amounts eligible for borrowing and lending under the Interfund Program are subject to certain restrictions.
|
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South Carolina Intermediate Municipal Bond Fund | Annual Report 2019
|
27 |
Table of Contents
Notes to Financial Statements
(continued)
April 30, 2019
April 30, 2019
Interfund loans are subject to the risk that the borrowing
fund could be unable to repay the loan when due, and a delay in repayment to the lending fund could result in lost opportunities and/or additional lending costs. The exemptive order is subject to conditions intended to mitigate conflicts of interest
arising from the Investment Manager’s relationship with each Participating Fund.
The Fund did not borrow or lend money under the Interfund
Program during the year ended April 30, 2019.
Note
7. Line of credit
The Fund has access to a
revolving credit facility with a syndicate of banks led by Citibank, N.A., HSBC Bank USA, N.A. and JPMorgan Chase Bank, N.A. whereby the Fund may borrow for the temporary funding of shareholder redemptions or for other temporary or emergency
purposes. The credit facility, which is a collective agreement between the Fund and certain other funds managed by the Investment Manager or an affiliated investment manager, severally and not jointly, permits collective borrowings up to $1 billion.
Interest is charged to each participating fund based on its borrowings at a rate equal to the higher of (i) the federal funds effective rate, (ii) the one-month LIBOR rate and (iii) the overnight bank funding rate, plus in each case, 1.00%. Each
borrowing under the credit facility matures no later than 60 days after the date of borrowing. The Fund also pays a commitment fee equal to its pro rata share of the unused amount of the credit facility at a rate of 0.15% per annum. The commitment
fee is included in other expenses in the Statement of Operations. This agreement expires annually in December unless extended or renewed.
The Fund had no borrowings during the year ended April 30,
2019.
Note 8. Significant risks
Credit risk
Credit risk is the risk that the value of debt securities in
the Fund’s portfolio may decline because the issuer may default and fail to pay interest or repay principal when due. Rating agencies assign credit ratings to debt securities to indicate their credit risk. Lower rated or unrated debt
securities held by the Fund may present increased credit risk as compared to higher-rated debt securities.
Geographic concentration risk
Because the Fund invests substantially in municipal securities
issued by the state identified in the Fund’s name and political sub-divisions of that state, the Fund will be particularly affected by adverse tax, legislative, regulatory, demographic or political changes as well as changes impacting the
state’s financial, economic or other condition and prospects. In addition, because of the relatively small number of issuers of tax-exempt securities in the state, the Fund may invest a higher percentage of assets in a single issuer and,
therefore, be more exposed to the risk of loss than a fund that invests more broadly. The value of municipal and other securities owned by the Fund also may be adversely affected by future changes in federal or state income tax laws.
Interest rate risk
Interest rate risk is the risk of losses attributable to
changes in interest rates. In general, if prevailing interest rates rise, the values of debt securities tend to fall, and if interest rates fall, the values of debt securities tend to rise. Actions by governments and central banking authorities can
result in increases in interest rates. Increasing interest rates may negatively affect the value of debt securities held by the Fund, resulting in a negative impact on the Fund’s performance and net asset value per share. In general, the
longer the maturity or duration of a debt security, the greater its sensitivity to changes in interest rates.
Liquidity risk
Liquidity risk is the risk associated with a lack of
marketability of investments which may make it difficult to sell the investment at a desirable time or price. Changing regulatory, market or other conditions or environments (for example, the interest rate or credit environments) may adversely
affect the liquidity of the Fund’s investments. The Fund may have to accept a lower selling price for the holding, sell other investments, or forego another, more appealing investment opportunity.
| 28 | Columbia South Carolina Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Notes to Financial Statements
(continued)
April 30, 2019
April 30, 2019
Generally, the less
liquid the market at the time the Fund sells a portfolio investment, the greater the risk of loss or decline of value to the Fund. A less liquid market can lead to an increase in Fund redemptions, which may negatively impact Fund performance and net
asset value per share, including, for example, if the Fund is forced to sell securities in a down market.
Shareholder concentration risk
At April 30, 2019, one unaffiliated shareholder of record
owned 55.0% of the outstanding shares of the Fund in one or more accounts. The Fund has no knowledge about whether any portion of those shares was owned beneficially. Subscription and redemption activity by concentrated accounts may have a
significant effect on the operations of the Fund. In the case of a large redemption, the Fund may be forced to sell investments at inopportune times, including its liquid positions, which may result in Fund losses and the Fund holding a higher
percentage of less liquid positions. Large redemptions could result in decreased economies of scale and increased operating expenses for non-redeeming Fund shareholders.
Note 9. Subsequent events
Management has evaluated the events and transactions that
have occurred through the date the financial statements were issued and noted no items requiring adjustment of the financial statements or additional disclosure.
Note 10. Information regarding pending and settled
legal proceedings
Ameriprise Financial and certain of
its affiliates have historically been involved in a number of legal, arbitration and regulatory proceedings, including routine litigation, class actions, and governmental actions, concerning matters arising in connection with the conduct of their
business activities. Ameriprise Financial believes that the Fund is not currently the subject of, and that neither Ameriprise Financial nor any of its affiliates are the subject of, any pending legal, arbitration or regulatory proceedings that are
likely to have a material adverse effect on the Fund or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Fund. Ameriprise Financial is required to make quarterly (10-Q), annual (10-K) and, as necessary,
8-K filings with the Securities and Exchange Commission (SEC) on legal and regulatory matters that relate to Ameriprise Financial and its affiliates. Copies of these filings may be obtained by accessing the SEC website at www.sec.gov.
There can be no assurance that these matters, or the adverse
publicity associated with them, will not result in increased Fund redemptions, reduced sale of Fund shares or other adverse consequences to the Fund. Further, although we believe proceedings are not likely to have a material adverse effect on the
Fund or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Fund, these proceedings are subject to uncertainties and, as such, we are unable to estimate the possible loss or range of loss that may result.
An adverse outcome in one or more of these proceedings could result in adverse judgments, settlements, fines, penalties or other relief that could have a material adverse effect on the consolidated financial condition or results of operations of
Ameriprise Financial.
|
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South Carolina Intermediate Municipal Bond Fund | Annual Report 2019
|
29 |
Table of Contents
Report of Independent Registered Public Accounting Firm
To the
Board of Trustees of Columbia Funds Series Trust and Shareholders of Columbia South Carolina Intermediate Municipal Bond Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and
liabilities, including the portfolio of investments, of Columbia South Carolina Intermediate Municipal Bond Fund (formerly known as Columbia AMT-Free South Carolina Intermediate Muni Bond Fund) (one of the funds constituting Columbia Funds Series
Trust, referred to hereafter as the "Fund") as of April 30, 2019, the related statement of operations for the year ended April 30, 2019, the statement of changes in net assets for each of the two years in the period ended April 30, 2019, including
the related notes, and the financial highlights for each of the periods indicated therein (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the
financial position of the Fund as of April 30, 2019, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended April 30, 2019 and the financial highlights for each of the
periods indicated therein in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the
Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB)
and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in
accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks
of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation
of securities owned as of April 30, 2019 by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our
opinion.
/s/PricewaterhouseCoopers LLP
Minneapolis, Minnesota
June 21, 2019
We have served as the auditor of one or more investment
companies within the Columbia Funds Complex since 1977.
| 30 | Columbia South Carolina Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Federal Income Tax Information
(Unaudited)
(Unaudited)
The Fund hereby designates the following tax attributes for
the fiscal year ended April 30, 2019. Shareholders will be notified in early 2020 of the amounts for use in preparing 2019 income tax returns.
|
Exempt-
interest dividends |
|
| 100.00% |
Exempt-interest dividends. The percentage of net investment
income distributed during the fiscal year that qualifies as exempt-interest dividends for federal income tax purposes.
|
Columbia
South Carolina Intermediate Municipal Bond Fund | Annual Report 2019
|
31 |
Table of Contents
TRUSTEES AND OFFICERS
The
Board oversees the Fund’s operations and appoints officers who are responsible for day-to-day business decisions based on policies set by the Board. The following table provides basic biographical information about the Fund’s Trustees as
of the printing of this report, including their principal occupations during the past five years, although specific titles for individuals may have varied over the period. Under current Board policy, Trustees not affiliated with the Investment
Manager generally may serve through the end of the calendar year in which they reach the mandatory retirement age established by the Board.
Independent trustees
|
Name,
address, year of birth |
Position
held
with the Trust and length of service |
Principal
occupation(s)
during past five years and other relevant professional experience |
Number
of
Funds in the Columbia Funds complex overseen |
Other
directorships
held by Trustee during the past five years |
|
George
S. Batejan
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1953 |
Trustee since 1/17 | Executive Vice President, Global Head of Technology and Operations, Janus Capital Group, Inc., 2010-2016 | 119 | Former Chairman of the Board, NICSA (National Investment Company Services Association) (Executive Committee, Nominating Committee and Governance Committee), 2014-2016; former Director, Intech Investment Management, 2011-2016; former Board Member, Metro Denver Chamber of Commerce, 2015-2016; former Advisory Board Member, University of Colorado Business School, 2015-2018 |
|
Kathleen
Blatz
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1954 |
Trustee since 1/06 for RiverSource Funds and since 6/11 for Nations Funds | Attorney; specializing in arbitration and mediation; Chief Justice, Minnesota Supreme Court, 1998-2006; Associate Justice, Minnesota Supreme Court, 1996-1998; Fourth Judicial District Court Judge, Hennepin County, 1994-1996; Attorney in private practice and public service, 1984-1993; State Representative, Minnesota House of Representatives, 1979-1993, which included service on the Tax and Financial Institutions and Insurance Committees; Member and Interim Chair, Minnesota Sports Facilities Authority, January 2017-July 2017; Interim President and Chief Executive Officer, Blue Cross and Blue Shield of Minnesota (health care insurance), February-July 2018 | 119 | Trustee, BlueCross BlueShield of Minnesota since 2009 (Chair of the Business Development Committee, 2014-2017; Chair of the Governance Committee since 2017); Chair of the Robina Foundation since August 2013; former Member and Chair of the Board, Minnesota Sports Facilities Authority, January 2017-July 2017 |
|
Edward
J. Boudreau, Jr.
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1944 |
Chair of the Board since 1/18; Trustee since 6/11 for RiverSource Funds and since 1/05 for Nations Funds | Managing Director, E.J. Boudreau & Associates (consulting) since 2000; FINRA Industry Arbitrator, 2002-present; Chairman and Chief Executive Officer, John Hancock Investments (asset management), Chairman and Interested Trustee for open-end and closed-end funds offered by John Hancock, 1989-2000; John Hancock Mutual Life Insurance Company, including Senior Vice President and Treasurer and Senior Vice President Information Technology, 1968-1988 | 119 | Former Trustee, Boston Museum of Science (Chair of Finance Committee) 1985-2013; former Trustee, BofA Funds Series Trust (11 funds), 2005-2011 |
| 32 | Columbia South Carolina Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
TRUSTEES AND OFFICERS
(continued)
Independent trustees
(continued)
|
Name,
address, year of birth |
Position
held
with the Trust and length of service |
Principal
occupation(s)
during past five years and other relevant professional experience |
Number
of
Funds in the Columbia Funds complex overseen |
Other
directorships
held by Trustee during the past five years |
|
Pamela
G. Carlton
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1954 |
Trustee since 7/07 for RiverSource Funds and since 6/11 for Nations Funds | President, Springboard — Partners in Cross Cultural Leadership (consulting company) since 2003; Managing Director of US Equity Research, JP Morgan Chase, 1999-2003; Director of US Equity Research, Chase Asset Management, 1996-1999; Co-Director Latin America Research, 1993-1996, COO Global Research, 1992-1996, Co-Director of US Research, 1991-1992, Investment Banker, Morgan Stanley, 1982-1991 | 119 | Trustee, New York Presbyterian Hospital Board (Executive Committee and Chair of Human Resources Committee) since 1996; Director, Laurel Road Bank (Audit Committee) since 2017 |
|
Patricia
M. Flynn
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1950 |
Trustee since 11/04 for RiverSource Funds and since 6/11 for Nations Funds | Trustee Professor of Economics and Management, Bentley University since 1976 (also teaches and conducts research on corporate governance); Dean, McCallum Graduate School of Business, Bentley University, 1992-2002 | 119 | Trustee, MA Taxpayers Foundation since 1997; Board of Directors, The MA Business Roundtable since 2003; Board of Governors, Innovation Institute, MA Technology Collaborative since 2010 |
|
Brian
J. Gallagher
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1954 |
Trustee since 12/17 | Retired; Partner with Deloitte & Touche LLP and its predecessors, 1977-2016 | 117 | Trustee, Catholic Schools Foundation since 2004 |
|
Catherine
James Paglia
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1952 |
Trustee since 11/04 for RiverSource Funds and since 6/11 for Nations Funds | Director, Enterprise Asset Management, Inc. (private real estate and asset management company) since September 1998; Managing Director and Partner, Interlaken Capital, Inc., 1989-1997; Managing Director, Morgan Stanley, 1982-1989; Vice President, Investment Banking, 1980-1982, Associate, Investment Banking, 1976-1980, Dean Witter Reynolds, Inc. | 119 | Director, Valmont Industries, Inc. (irrigation systems manufacturer) since 2012; Trustee, Carleton College (on the Investment Committee); Trustee, Carnegie Endowment for International Peace (on the Investment Committee) |
|
Anthony
M. Santomero
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1946 |
Trustee since 6/11 for RiverSource Funds and since 1/08 for Nations Funds | Richard K. Mellon Professor Emeritus of Finance, The Wharton School, University of Pennsylvania, since 2002; Senior Advisor, McKinsey & Company (consulting), 2006-2008; President, Federal Reserve Bank of Philadelphia, 2000- 2006; Professor of Finance, The Wharton School, University of Pennsylvania, 1972-2002 | 119 | Trustee, Penn Mutual Life Insurance Company since March 2008; Director, Renaissance Reinsurance Ltd. since May 2008; former Trustee, BofA Funds Series Trust (11 funds), 2008-2011; former Director, Citigroup Inc. and Citibank, N.A., 2009-2019 |
|
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South Carolina Intermediate Municipal Bond Fund | Annual Report 2019
|
33 |
Table of Contents
TRUSTEES AND OFFICERS
(continued)
Independent trustees
(continued)
|
Name,
address, year of birth |
Position
held
with the Trust and length of service |
Principal
occupation(s)
during past five years and other relevant professional experience |
Number
of
Funds in the Columbia Funds complex overseen |
Other
directorships
held by Trustee during the past five years |
|
Minor
M. Shaw
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1947 |
Trustee since 6/11 for RiverSource Funds and since 2003 for Nations Funds | President, Micco LLC (private investments) since 2011; President, Micco Corp. (family investment business), 1998-2011 | 119 | Director, BlueCross BlueShield of South Carolina since April 2008; Board Chair, Hollingsworth Funds since 2016; Advisory Board member, Duke Energy Corp. since October 2016; Chair of the Duke Endowment; Chair of Greenville – Spartanburg Airport Commission; former Trustee, BofA Funds Series Trust (11 funds), 2003-2011; former Director, Piedmont Natural Gas, 2004-2016; former Director, National Association of Corporate Directors, Carolinas Chapter, 2013-2018 |
|
Sandra
Yeager
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1964 |
Trustee since 12/17 | Retired; President and founder, Hanoverian Capital, LLC (SEC registered investment advisor firm), 2008-2016; Managing Director, DuPont Capital, 2006-2008; Managing Director, Morgan Stanley Investment Management, 2004-2006; Senior Vice President, Alliance Bernstein, 1990-2004 | 117 | Director, NAPE Education Foundation since October 2016 |
Interested trustee affiliated with Investment
Manager*
|
Name,
address, year of birth |
Position held with the Trust and length of service |
Principal
occupation(s) during the
past five years and other relevant professional experience |
Number
of
Funds in the Columbia Funds complex overseen |
Other
directorships
held by Trustee during the past five years |
|
William
F. Truscott
c/o Columbia Management Investment Advisers, LLC 225 Franklin St. Boston, MA 02110 1960 |
Trustee since 11/01 for RiverSource Funds and since 6/11 for Nations Funds; Senior Vice President since 2002 for RiverSource Funds and since 5/10 for Nations Funds | Chairman of the Board and President, Columbia Management Investment Advisers, LLC since May 2010 and February 2012, respectively; Chief Executive Officer, Global Asset Management, Ameriprise Financial, Inc. since September 2012 (previously Chief Executive Officer, U.S. Asset Management & President, Annuities, May 2010 - September 2012); Director and Chief Executive Officer, Columbia Management Investment Distributors, Inc. since May 2010 and February 2012, respectively; Chairman of the Board and Chief Executive Officer, RiverSource Distributors, Inc. since 2006; Director, Threadneedle Asset Management Holdings, SARL since 2014; President and Chief Executive Officer, Ameriprise Certificate Company, 2006 - August 2012. | 188 | Chairman of the Board, Columbia Management Investment Advisers, LLC since May 2010; Director, Columbia Management Investment Distributors, Inc. since May 2010; former Director, Ameriprise Certificate Company, 2006-January 2013 |
| * | Interested person (as defined under the 1940 Act) by reason of being an officer, director, security holder and/or employee of the Investment Manager or Ameriprise Financial. |
| 34 | Columbia South Carolina Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
TRUSTEES AND OFFICERS
(continued)
Nations Funds refer to the Funds within the Columbia Funds
Complex that historically bore the Nations brand and includes series of Columbia Funds Series Trust. RiverSource Funds refer to the Funds within the Columbia Funds Complex that historically bore the RiverSource brand and includes series of Columbia
Funds Series Trust II.
The Statement of Additional
Information has additional information about the Fund’s Board members and is available, without charge, upon request by calling 800.345.6611, visiting columbiathreadneedleus.com/investor/ or contacting your financial intermediary.
|
Columbia
South Carolina Intermediate Municipal Bond Fund | Annual Report 2019
|
35 |
Table of Contents
TRUSTEES AND OFFICERS
(continued)
The Board has appointed officers who are responsible for
day-to-day business decisions based on policies it has established. The officers serve at the pleasure of the Board. The following table provides basic information about the Officers of the Fund as of the printing of this report, including principal
occupations during the past five years, although their specific titles may have varied over the period. In addition to Mr. Truscott, who is Senior Vice President, the Fund’s other officers are:
Fund officers
|
Name,
address and year of birth |
Position
and year
first appointed to position for any Fund in the Columbia Funds complex or a predecessor thereof |
Principal occupation(s) during past five years |
|
Christopher
O. Petersen
5228 Ameriprise Financial Center Minneapolis, MN 55474 Born 1970 |
President and Principal Executive Officer (2015) | Vice President and Lead Chief Counsel, Ameriprise Financial, Inc. since January 2015 (previously Vice President and Chief Counsel, January 2010 - December 2014; officer of Columbia Funds and affiliated funds since 2007. |
|
Michael
G. Clarke
225 Franklin Street Boston, MA 02110 Born 1969 |
Chief Financial Officer (Principal Financial Officer) (2009) and Senior Vice President (2019) | Vice President, Head of North American Operations, and Co-Head of Global Operations, Columbia Management Investment Advisers, LLC, since June 2019 (previously Vice President – Accounting and Tax, May 2010 - May 2019); senior officer of Columbia Funds and affiliated funds since 2002 (previously Treasurer and Chief Accounting Officer, January 2009 - January 2019 and December 2015 - January 2019, respectively). |
|
Joseph
Beranek
5890 Ameriprise Financial Center Minneapolis, MN 55474 Born 1965 |
Treasurer and Chief Accounting Officer (Principal Accounting Officer) (2019) | Vice President — Mutual Fund Accounting and Financial Reporting, Columbia Management Investment Advisers, LLC, since December 2018 and March 2017, respectively (previously Vice President — Pricing and Corporate Actions, May 2010 - March 2017). |
|
Paul
B. Goucher
485 Lexington Avenue New York, NY 10017 Born 1968 |
Senior Vice President (2011) and Assistant Secretary (2008) | Senior Vice President and Assistant General Counsel, Ameriprise Financial, Inc. since January 2017 (previously Vice President and Lead Chief Counsel, November 2008 - January 2017 and January 2013 - January 2017, respectively); Vice President, Chief Legal Officer and Assistant Secretary, Columbia Management Investment Advisers, LLC since March 2015 (previously Vice President and Assistant Secretary, May 2010 – March 2015). |
|
Thomas
P. McGuire
225 Franklin Street Boston, MA 02110 Born 1972 |
Senior Vice President and Chief Compliance Officer (2012) | Vice President — Asset Management Compliance, Ameriprise Financial, Inc., since May 2010; Chief Compliance Officer, Ameriprise Certificate Company since September 2010. |
|
Colin
Moore
225 Franklin Street Boston, MA 02110 Born 1958 |
Senior Vice President (2010) | Executive Vice President and Global Chief Investment Officer, Ameriprise Financial, Inc., since July 2013; Executive Vice President and Global Chief Investment Officer, Columbia Management Investment Advisers, LLC since July 2013. |
|
Ryan
C. Larrenaga
225 Franklin Street Boston, MA 02110 Born 1970 |
Senior Vice President (2017), Chief Legal Officer (2017), and Secretary (2015) | Vice President and Chief Counsel, Ameriprise Financial, Inc. since August 2018 (previously Vice President and Group Counsel, August 2011 - August 2018); officer of Columbia Funds and affiliated funds since 2005. |
|
Michael
E. DeFao
225 Franklin Street Boston, MA 02110 Born 1968 |
Vice President (2011) and Assistant Secretary (2010) | Vice President and Chief Counsel, Ameriprise Financial, Inc. since May 2010. |
|
Lyn
Kephart-Strong
5228 Ameriprise Financial Center Minneapolis, MN 55474 Born 1960 |
Vice President (2015) | President, Columbia Management Investment Services Corp. since October 2014; Vice President & Resolution Officer, Ameriprise Trust Company since August 2009. |
| 36 | Columbia South Carolina Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Additional information
The
Fund mails one shareholder report to each shareholder address, unless such shareholder elected to receive shareholder reports from the Fund electronically. If you would like more than one report, please call shareholder services at 800.345.6611 and
additional reports will be sent to you.
Proxy voting
policies and procedures
The policy of the Board of
Trustees is to vote the proxies of the companies in which the Fund holds investments consistent with the procedures as stated in the Statement of Additional Information (SAI). You may obtain a copy of the SAI without charge by calling 800.345.6611;
contacting your financial intermediary; visiting columbiathreadneedleus.com/investor/; or searching the website of the Securities and Exchange Commission (SEC) at sec.gov. Information regarding how the Fund voted proxies relating to portfolio
securities is filed with the SEC by August 31st for the most recent 12-month period ending June 30th of that year, and is available without charge by visiting columbiathreadneedleus.com/investor/, or searching the website of the SEC at
sec.gov.
Quarterly schedule of investments
The Fund files a complete schedule of portfolio holdings
with the SEC for the first and third quarters of each fiscal year on Form N-Q or Form N-PORT (available for filings after March 31, 2019). The Fund’s Form N-Q or Form N-PORT is available on the SEC’s website at sec.gov. The Fund’s
complete schedule of portfolio holdings, as filed on Form N-Q or Form N-PORT, can also be obtained without charge, upon request, by calling 800.345.6611.
Additional Fund information
For more information about the Fund, please visit
columbiathreadneedleus.com/investor/ or call 800.345.6611. Customer Service Representatives are available to answer your questions Monday through Friday from 8 a.m. to 7 p.m. Eastern time.
Fund investment manager
Columbia Management Investment Advisers, LLC
225 Franklin Street
Boston, MA 02110
Fund distributor
Columbia Management Investment Distributors, Inc.
225 Franklin Street
Boston, MA 02110
Fund transfer agent
Columbia Management Investment Services Corp.
P.O. Box 219104
Kansas City, MO 64121-9104
|
Columbia
South Carolina Intermediate Municipal Bond Fund | Annual Report 2019
|
37 |
Table of Contents
[THIS PAGE INTENTIONALLY LEFT BLANK]
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Table of Contents
Columbia South Carolina Intermediate Municipal Bond Fund
P.O. Box 219104
Kansas City, MO 64121-9104
Please read and consider the investment objectives, risks,
charges and expenses for any fund carefully before investing. For a prospectus and summary prospectus, which contains this and other important information about the Fund, go to
columbiathreadneedleus.com/investor/ . The Fund is distributed by Columbia Management Investment Distributors, Inc., member FINRA, and managed by Columbia Management Investment Advisers, LLC.
columbiathreadneedleus.com/investor/ . The Fund is distributed by Columbia Management Investment Distributors, Inc., member FINRA, and managed by Columbia Management Investment Advisers, LLC.
Columbia Threadneedle Investments (Columbia Threadneedle) is
the global brand name of the Columbia and Threadneedle group of companies. All rights reserved.
© 2019 Columbia Management Investment Advisers, LLC.
columbiathreadneedleus.com/investor/
ANN231_04_J01_(06/19)
Table of Contents
Annual
Report
April 30, 2019
April 30, 2019
Columbia North Carolina Intermediate Municipal
Bond Fund
(formerly Columbia AMT-Free North
Carolina Intermediate Muni Bond Fund)
Beginning on January 1, 2021, as permitted by regulations
adopted by the Securities and Exchange Commission, paper copies of the Fund’s annual and semiannual shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the
reports will be made available on the Fund’s website (columbiathreadneedleus.com/investor/), and each time a report is posted you will be notified by mail and provided with a website address to access the report.
If you have already elected to receive shareholder reports
electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically at any time by contacting your financial intermediary (such
as a broker-dealer or bank) or, for Fund shares held directly with the Fund, by calling 800.345.6611 or by enrolling in “eDelivery” by logging into your account at columbiathreadneedleus.com/investor/.
You may elect to receive all future reports in paper free of
charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue receiving paper copies of your shareholder reports. If you invest directly with the Fund, you can call 800.345.6611 to
let the Fund know you wish to continue receiving paper copies of your shareholder reports. Your election to receive paper reports will apply to all Columbia Funds held in your account if you invest through a financial intermediary or all Columbia
Funds held with the fund complex if you invest directly with the Fund.
Not FDIC Insured • No bank guarantee • May lose
value
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Columbia North Carolina Intermediate Municipal Bond
Fund | Annual Report 2019
Table of Contents
Fund at a Glance
Investment objective
Columbia North Carolina Intermediate
Municipal Bond Fund (the Fund) seeks current income exempt from U.S. federal income tax and North Carolina individual income tax, consistent with moderate fluctuation of principal.
Portfolio
management
Paul Fuchs,
CFA
Lead
Portfolio Manager
Managed Fund
since 2016
Anders Myhran,
CFA
Portfolio
Manager
Managed Fund
since May 2019
Deborah
Vargo
Portfolio
Manager
Managed Fund
since 2017
Returns for Class A shares are shown
with and without the maximum initial sales charge of 3.00%. Returns for Class C shares are shown with and without the 1.00% contingent deferred sales charge for the first year only. The Fund’s other share classes are not subject to sales
charges and have limited eligibility. Please see the Fund’s prospectus for details. Performance for different share classes will vary based on differences in sales charges and fees associated with each share class. All results shown assume
reinvestment of distributions during the period. Returns do not reflect the deduction of taxes that a shareholder may pay on Fund distributions or on the redemption of Fund shares. Performance results reflect the effect of any fee waivers or
reimbursements of Fund expenses by Columbia Management Investment Advisers, LLC and/or any of its affiliates. Absent these fee waivers or expense reimbursement arrangements, performance results would have been lower.
The performance information shown represents past performance and
is not a guarantee of future results. The investment return and principal value of your investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than
the performance information shown. You may obtain performance information current to the most recent month-end by contacting your financial intermediary, visiting columbiathreadneedleus.com/investor/ or calling 800.345.6611.
| * | The returns shown for periods prior to the share class inception date (including returns for the Life of the Fund, if shown, which are since Fund inception) include the returns of the Fund’s oldest share class. These returns are adjusted to reflect any higher class-related operating expenses of the newer share classes, as applicable. Please visit columbiathreadneedleus.com/investor/investment-products /mutual-funds/appended-performance for more information. |
The Bloomberg Barclays 3–15 Year Blend Municipal Bond
Index is an unmanaged index that tracks the performance of municipal bonds issued after December 31, 1990, with remaining maturities between 2 and 17 years and at least $7 million in principal amount outstanding.
Indices are not available for investment, are not
professionally managed and do not reflect sales charges, fees, brokerage commissions, taxes or other expenses of investing. Securities in the Fund may not match those in an index.
|
Columbia
North Carolina Intermediate Municipal Bond Fund | Annual Report 2019
|
3 |
Table of Contents
Fund at a Glance
(continued)
Performance of a
hypothetical $10,000 investment (April 30, 2009 — April 30, 2019)
The chart above shows the
change in value of a hypothetical $10,000 investment in Class A shares of Columbia North Carolina Intermediate Municipal Bond Fund during the stated time period, and does not reflect the deduction of taxes that a shareholder may pay on Fund
distributions or on the redemption of Fund shares.
| Quality breakdown (%) (at April 30, 2019) | |
| AAA rating | 18.1 |
| AA rating | 45.8 |
| A rating | 26.7 |
| BBB rating | 6.5 |
| Not rated | 2.9 |
| Total | 100.0 |
Percentages indicated are based
upon total fixed income investments.
Bond ratings apply
to the underlying holdings of the Fund and not the Fund itself and are divided into categories ranging from highest to lowest credit quality, determined by using the middle rating of Moody’s, S&P and Fitch, after dropping the highest and
lowest available ratings. When ratings are available from only two rating agencies, the lower rating is used. When a rating is available from only one rating agency, that rating is used. When a bond is not rated by any rating agency, it is
designated as “Not rated.” Credit quality ratings assigned by a rating agency are subjective opinions, not statements of fact, and are subject to change, including daily. The ratings assigned by credit rating agencies are but one of the
considerations that the Investment Manager and/or Fund’s subadviser incorporates into its credit analysis process, along with such other issuer-specific factors as cash flows, capital structure and leverage ratios, ability to de-leverage
(repay) through free cash flow, quality of management, market positioning and access to capital, as well as such security-specific factors as the terms of the security (e.g., interest rate and time to maturity) and the amount and type of any
collateral.
| 4 | Columbia North Carolina Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Manager Discussion of Fund Performance
For
the 12-month period that ended April 30, 2019, the Fund’s Class A shares returned 4.26% excluding sales charges, and its Institutional shares returned 4.52%. The Fund’s benchmark, the Bloomberg Barclays 3-15 Year Blend Municipal Bond
Index, returned 5.91% for the same time period. North Carolina municipals underperformed the national benchmark, largely as a result of their above-average credit quality.
Market overview
Municipal bonds generated healthy gains in the 12-month
reporting period, with the bulk of the rally occurring from November 2018 onward. Municipals performed reasonably well from May through August on the strength of falling U.S. Treasury yields and the combination of strong investor demand and reduced
new-issue supply in the tax-exempt market. Conditions became less favorable in September 2018, when U.S. Treasury yields climbed on indications of continued strength in the U.S. economy and fears about inflation pressures that could result from a
trade war with China. The negative trend persisted in October, as yields continued to rise on concerns that the U.S. Federal Reserve (Fed) would take a more aggressive approach to raising interest rates in 2019 than investors had been
expecting.
Sentiment again shifted abruptly in early
November, causing yields to fall sharply through the end of 2018. The fixed-income markets rallied significantly due to signs of slowing global growth, volatility in the higher risk assets, and expectations that the Fed would in fact adopt a more
accommodative stance. In addition, various geopolitical factors, including uncertainty surrounding the U.S.-China trade dispute, Brexit negotiations, and the U.S. government shutdown, fueled a “flight to quality” into bonds. Municipals
rallied as a result, helping the major national indexes finish 2018 in positive territory.
The rally continued into the New Year, leading to the largest
first-quarter gain for the tax-exempt market since 2014. The first quarter of 2019 was also the sixth-best for municipals in the past 30 years. During this time, bonds were well supported by the backdrop of slow global growth and the increasingly
accommodative policies of the world’s major central banks. Supply-and-demand factors also remained highly favorable. Municipals rallied further in April, helping them to post a solid gain for the full 12 months.
Longer term bonds outpaced shorter term issues in the period,
mirroring trends in the Treasury market, while lower quality bonds strongly outperformed their higher rated counterparts. The “risk-on” environment of January to April led to robust investor demand for higher risk assets, lifting the
returns of higher yielding bonds in all fixed-income categories.
Positive returns but relative underperformance for North
Carolina municipals
North Carolina’s
intermediate municipal market lagged the broader U.S. indexes in the period. The state’s market was of a much higher quality level than the nation as a whole, with more than 45% of its debt rated AAA. This translated to both a smaller
contribution from yield and less ability to benefit from the outperformance of lower rated bonds.
Despite this performance shortfall, the state’s economic
fundamentals remained robust. North Carolina’s economy experienced strong growth across a broad variety of sectors, and the state maintained a low unemployment rate even as migration from other U.S. states continued to increase the labor
force. North Carolina has historically maintained strong financial characteristics, and this trend continued through the completion of its most recent fiscal year. Revenues were well above projections for the current fiscal year, driven primarily by
individual income tax payments in April.
Contributors
and detractors
Given the outperformance for longer
maturity issues, the Fund benefitted from its overweight in bonds with maturities of 17 years and above. At the sector level, longer dated, intermediate-maturity holdings in student and state-sponsored housing projects produced returns meaningfully
above the benchmark. Positions in several of the University of North Carolina campuses and other private colleges contributed positively, as well. The Fund’s holdings in the education sector were rated A on average, which helped performance
given the stronger returns for bonds further down the quality spectrum.
Positions in pre-refunded bonds detracted from results. The
category underperformed due to its higher quality, very short maturities (less than three years) and low yields. We reduced the Fund’s allocation to pre-refunded bonds during the course of the period.
|
Columbia
North Carolina Intermediate Municipal Bond Fund | Annual Report 2019
|
5 |
Table of Contents
Manager Discussion of Fund Performance
(continued)
The Fund’s holdings in Mission Health also detracted.
The bonds were called out of the portfolio at par after the system being acquired by a “for-profit” entity, meaning that it can no longer have tax-exempt debt outstanding. The bonds were trading well above par prior to the transaction,
and their price dropped precipitously after the deal was announced.
Fund positioning
At the close of the period, we were fairly comfortable with
the overall interest rate environment due to the combination of muted inflation, the late stage of the economic expansion, and the Fed’s signals that it intends to remain on hold through the end of 2019. In addition, ongoing geopolitical
issues, including trade negotiations with China, Brexit uncertainty, and Washington infighting, continue to put downward pressure on interest rates. With this as the backdrop, our strategy remained consistent during the period. We targeted a roughly
neutral duration with more emphasis on the longer part of the intermediate yield curve. The Fund’s quality profile continued to favor the lower rated segment of the investment-grade market, with meaningful allocations to hospital, housing, and
special property tax issues.
Fixed-income securities
present
issuer
default risk. The Fund invests substantially in
municipal securities
and will be affected by tax, legislative, regulatory, demographic or political changes,
as well as changes impacting a state’s financial, economic or other conditions. A relatively small number of tax-exempt issuers may necessitate the Fund investing more heavily in a single issuer and, therefore, be more exposed to the risk of
loss than a fund that invests more broadly. The value of the Fund’s portfolio may be more volatile than a more
geographically diversified
fund.
Prepayment and
extension
risk exists because the timing of payments on a loan, bond or other investment may accelerate when interest rates fall or decelerate when interest rates rise which may reduce investment opportunities and potential returns. A rise in
interest rates
may result in a price decline of fixed-income instruments held by the Fund, negatively impacting its performance and NAV. Falling rates may result in the Fund investing in lower yielding debt
instruments, lowering the Fund’s income and yield. These risks may be heightened for longer maturity and duration securities.
Non-investment-grade
(high-yield or junk) securities present greater price
volatility and more risk to principal and income than higher rated securities.
Market
risk may affect a single issuer, sector of the economy, industry or the market as a whole. Federal and state
tax
rules apply to capital gain distributions and any gains or losses on sales. Income may be subject to state or local taxes.
Liquidity
risk is associated with the difficulty
of selling underlying investments at a desirable time or price. See the Fund’s prospectus for more information on these and other risks.
The views expressed in this report reflect the current views of
the respective parties. These views are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict, so actual outcomes and results may differ significantly from the views expressed.
These views are subject to change at any time based upon economic, market or other conditions and the respective parties disclaim any responsibility to update such views. These views may not be relied on as investment advice and, because investment
decisions for a Columbia fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any particular Columbia fund. References to specific securities should not be construed as a recommendation or
investment advice.
| 6 | Columbia North Carolina Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Understanding Your Fund’s Expenses
(Unaudited)
(Unaudited)
As an investor, you incur two types of costs. There are
shareholder transaction costs, which generally include sales charges on purchases and may include redemption fees. There are also ongoing fund costs, which generally include management fees, distribution and/or service fees, and other fund expenses.
The following information is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to help you compare these costs with the ongoing costs of investing in other mutual funds.
Analyzing your Fund’s expenses
To illustrate these ongoing costs, we have provided examples
and calculated the expenses paid by investors in each share class of the Fund during the period. The actual and hypothetical information in the table is based on an initial investment of $1,000 at the beginning of the period indicated and held for
the entire period. Expense information is calculated two ways and each method provides you with different information. The amount listed in the “Actual” column is calculated using the Fund’s actual operating expenses and total
return for the period. You may use the Actual information, together with the amount invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000
= 8.6), then multiply the results by the expenses paid during the period under the “Actual” column. The amount listed in the “Hypothetical” column assumes a 5% annual rate of return before expenses (which is not the
Fund’s actual return) and then applies the Fund’s actual expense ratio for the period to the hypothetical return. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end
of the period or the expenses you paid during the period. See “Compare with other funds” below for details on how to use the hypothetical data.
Compare with other funds
Since all mutual funds are required to include the same
hypothetical calculations about expenses in shareholder reports, you can use this information to compare the ongoing cost of investing in the Fund with other funds. To do so, compare the hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of other funds. As you compare hypothetical examples of other funds, it is important to note that hypothetical examples are meant to highlight the ongoing costs of investing in a fund only and do not reflect any
transaction costs, such as sales charges, or redemption or exchange fees. Therefore, the hypothetical calculations are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. If
transaction costs were included in these calculations, your costs would be higher.
Expenses paid during the period
are equal to the annualized expense ratio for each class as indicated above, multiplied by the average account value over the period and then multiplied by the number of days in the Fund’s most recent fiscal half year and divided by 365.
Expenses do not include fees and expenses incurred indirectly
by the Fund from its investment in underlying funds, including affiliated and non-affiliated pooled investment vehicles, such as mutual funds and exchange-traded funds.
Had Columbia Management Investment Advisers, LLC and/or certain
of its affiliates not waived/reimbursed certain fees and expenses, account value at the end of the period would have been reduced.
|
Columbia
North Carolina Intermediate Municipal Bond Fund | Annual Report 2019
|
7 |
Table of Contents
Portfolio of Investments
April 30, 2019
April 30, 2019
(Percentages represent value of investments compared to net
assets)
Investments in securities
The accompanying Notes to Financial Statements are an integral part
of this statement.
| 8 | Columbia North Carolina Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Portfolio of Investments
(continued)
April 30, 2019
April 30, 2019
The accompanying Notes to Financial Statements are an integral part
of this statement.
|
Columbia
North Carolina Intermediate Municipal Bond Fund | Annual Report 2019
|
9 |
Table of Contents
Portfolio of Investments
(continued)
April 30, 2019
April 30, 2019
The accompanying Notes to Financial Statements are an integral part
of this statement.
| 10 | Columbia North Carolina Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Portfolio of Investments
(continued)
April 30, 2019
April 30, 2019
The accompanying Notes to Financial Statements are an integral part
of this statement.
|
Columbia
North Carolina Intermediate Municipal Bond Fund | Annual Report 2019
|
11 |
Table of Contents
Portfolio of Investments
(continued)
April 30, 2019
April 30, 2019
The accompanying Notes to Financial Statements are an integral part
of this statement.
| 12 | Columbia North Carolina Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Portfolio of Investments
(continued)
April 30, 2019
April 30, 2019
| Municipal Bonds (continued) | ||||
| Issue Description |
Coupon
Rate |
Principal
Amount ($) |
Value ($) | |
| Town of Fuquay-Varina Combined Utilities System | ||||
| Revenue Bonds | ||||
| Series 2016 | ||||
| 04/01/2030 | 5.000% | 335,000 | 398,891 | |
| 04/01/2031 | 5.000% | 450,000 | 531,792 | |
| Total | 25,699,496 | |||
|
Total
Municipal Bonds
(Cost $158,987,075) |
164,817,047 | |||
| Money Market Funds 0.6% | ||
| Shares | Value ($) | |
| Dreyfus Tax-Exempt Cash Management Fund, Institutional Shares, 1.981% (e) | 1,002,934 | 1,002,934 |
|
Total
Money Market Funds
(Cost $1,002,934) |
1,002,934 | |
|
Total
Investments in Securities
(Cost: $162,490,009) |
168,319,981 | |
| Other Assets & Liabilities, Net | 1,196,957 | |
| Net Assets | 169,516,938 | |
Notes to Portfolio of Investments
| (a) | The Fund is entitled to receive principal and interest from the guarantor after a day or a week’s notice or upon maturity. The maturity date disclosed represents the final maturity. |
| (b) | Represents a variable rate security where the coupon rate adjusts on specified dates (generally daily or weekly) using the prevailing money market rate. The interest rate shown was the current rate as of April 30, 2019. |
| (c) | Represents a security purchased on a when-issued basis. |
| (d) | Zero coupon bond. |
| (e) | The rate shown is the seven-day current annualized yield at April 30, 2019. |
Abbreviation Legend
| AGM | Assured Guaranty Municipal Corporation |
| GNMA | Government National Mortgage Association |
| IBC | Insurance Bond Certificate |
| NPFGC | National Public Finance Guarantee Corporation |
Fair value measurements
The Fund categorizes its fair value measurements according to
a three-level hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs by prioritizing that the most observable input be used when available. Observable inputs are those that market participants would use in
pricing an investment based on market data obtained from sources independent of the reporting entity. Unobservable inputs are those that reflect the Fund’s assumptions about the information market participants would use in pricing an
investment. An investment’s level within the fair value hierarchy is based on the lowest level of any input that is deemed significant to the asset’s or liability’s fair value measurement. The input levels are not necessarily an
indication of the risk or liquidity associated with investments at that level. For example, certain U.S. government securities are generally high quality and liquid, however, they are reflected as Level 2 because the inputs used to determine fair
value may not always be quoted prices in an active market.
Fair value inputs are summarized in the three broad levels
listed below:
| ■ | Level 1 — Valuations based on quoted prices for investments in active markets that the Fund has the ability to access at the measurement date. Valuation adjustments are not applied to Level 1 investments. |
| ■ | Level 2 — Valuations based on other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risks, etc.). |
| ■ | Level 3 — Valuations based on significant unobservable inputs (including the Fund’s own assumptions and judgment in determining the fair value of investments). |
The accompanying Notes to Financial Statements are an integral part of this
statement.
|
Columbia
North Carolina Intermediate Municipal Bond Fund | Annual Report 2019
|
13 |
Table of Contents
Portfolio of Investments
(continued)
April 30, 2019
April 30, 2019
Fair value
measurements
(continued)
Inputs that are used in determining fair value of an investment may include price information, credit data, volatility statistics, and other factors. These inputs can be either observable or unobservable. The availability of observable inputs can vary between investments, and is affected by various factors such as the type of investment, and the volume and level of activity for that investment or similar investments in the marketplace. The inputs will be considered by the Investment Manager, along with any other relevant factors in the calculation of an investment’s fair value. The Fund uses prices and inputs that are current as of the measurement date, which may include periods of market dislocations. During these periods, the availability of prices and inputs may be reduced for many investments. This condition could cause an investment to be reclassified between the various levels within the hierarchy.
Inputs that are used in determining fair value of an investment may include price information, credit data, volatility statistics, and other factors. These inputs can be either observable or unobservable. The availability of observable inputs can vary between investments, and is affected by various factors such as the type of investment, and the volume and level of activity for that investment or similar investments in the marketplace. The inputs will be considered by the Investment Manager, along with any other relevant factors in the calculation of an investment’s fair value. The Fund uses prices and inputs that are current as of the measurement date, which may include periods of market dislocations. During these periods, the availability of prices and inputs may be reduced for many investments. This condition could cause an investment to be reclassified between the various levels within the hierarchy.
Investments falling
into the Level 3 category are primarily supported by quoted prices from brokers and dealers participating in the market for those investments. However, these may be classified as Level 3 investments due to lack of market transparency and
corroboration to support these quoted prices. Additionally, valuation models may be used as the pricing source for any remaining investments classified as Level 3. These models may rely on one or more significant unobservable inputs and/or
significant assumptions by the Investment Manager. Inputs used in valuations may include, but are not limited to, financial statement analysis, capital account balances, discount rates and estimated cash flows, and comparable company data.
Under the direction of the Fund’s Board of Trustees (the
Board), the Investment Manager’s Valuation Committee (the Committee) is responsible for overseeing the valuation procedures approved by the Board. The Committee consists of voting and non-voting members from various groups within the
Investment Manager’s organization, including operations and accounting, trading and investments, compliance, risk management and legal.
The Committee meets at least monthly to review and approve
valuation matters, which may include a description of specific valuation determinations, data regarding pricing information received from approved pricing vendors and brokers and the results of Board-approved valuation control policies and
procedures (the Policies). The Policies address, among other things, instances when market quotations are or are not readily available, including recommendations of third party pricing vendors and a determination of appropriate pricing
methodologies; events that require specific valuation determinations and assessment of fair value techniques; securities with a potential for stale pricing, including those that are illiquid, restricted, or in default; and the effectiveness of third
party pricing vendors, including periodic reviews of vendors. The Committee meets more frequently, as needed, to discuss additional valuation matters, which may include the need to review back-testing results, review time-sensitive information or
approve related valuation actions. The Committee reports to the Board, with members of the Committee meeting with the Board at each of its regularly scheduled meetings to discuss valuation matters and actions during the period, similar to those
described earlier.
For investments categorized as Level 3,
the Committee monitors information similar to that described above, which may include: (i) data specific to the issuer or comparable issuers, (ii) general market or specific sector news and (iii) quoted prices and specific or similar security
transactions. The Committee considers this data and any changes from prior periods in order to assess the reasonableness of observable and unobservable inputs, any assumptions or internal models used to value those securities and changes in fair
value. This data is also used to corroborate, when available, information received from approved pricing vendors and brokers. Various factors impact the frequency of monitoring this information (which may occur as often as daily). However, the
Committee may determine that changes to inputs, assumptions and models are not required as a result of the monitoring procedures performed.
The following table is a summary of the inputs used to value the
Fund’s investments at April 30, 2019:
|
Level
1
quoted prices in active markets for identical assets ($) |
Level
2
other significant observable inputs ($) |
Level
3
significant unobservable inputs ($) |
Total ($) | |
| Investments in Securities | ||||
| Floating Rate Notes | — | 2,500,000 | — | 2,500,000 |
| Municipal Bonds | — | 164,817,047 | — | 164,817,047 |
| Money Market Funds | 1,002,934 | — | — | 1,002,934 |
| Total Investments in Securities | 1,002,934 | 167,317,047 | — | 168,319,981 |
See the Portfolio of Investments for
all investment classifications not indicated in the table.
The Fund’s assets assigned to the Level 2 input category
are generally valued using the market approach, in which a security’s value is determined through reference to prices and information from market transactions for similar or identical assets.
There were no transfers of financial assets between levels
during the period.
The accompanying Notes to Financial Statements are an integral part of this
statement.
| 14 | Columbia North Carolina Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Statement of Assets and Liabilities
April 30, 2019
April 30, 2019
| Assets | |
| Investments in securities, at value | |
| Unaffiliated issuers (cost $162,490,009) | $168,319,981 |
| Cash | 615,134 |
| Receivable for: | |
| Capital shares sold | 144,638 |
| Interest | 1,976,805 |
| Expense reimbursement due from Investment Manager | 240 |
| Prepaid expenses | 610 |
| Total assets | 171,057,408 |
| Liabilities | |
| Payable for: | |
| Investments purchased on a delayed delivery basis | 765,453 |
| Capital shares purchased | 268,265 |
| Distributions to shareholders | 350,678 |
| Management services fees | 2,184 |
| Distribution and/or service fees | 225 |
| Transfer agent fees | 4,098 |
| Compensation of board members | 109,867 |
| Other expenses | 39,700 |
| Total liabilities | 1,540,470 |
| Net assets applicable to outstanding capital stock | $169,516,938 |
| Represented by | |
| Paid in capital | 164,137,489 |
| Total distributable earnings (loss) (Note 2) | 5,379,449 |
| Total - representing net assets applicable to outstanding capital stock | $169,516,938 |
| Class A | |
| Net assets | $16,468,592 |
| Shares outstanding | 1,593,507 |
| Net asset value per share | $10.33 |
| Maximum sales charge | 3.00% |
| Maximum offering price per share (calculated by dividing the net asset value per share by 1.0 minus the maximum sales charge for Class A shares) | $10.65 |
| Advisor Class | |
| Net assets | $5,504,785 |
| Shares outstanding | 533,374 |
| Net asset value per share | $10.32 |
| Class C | |
| Net assets | $4,096,055 |
| Shares outstanding | 396,446 |
| Net asset value per share | $10.33 |
| Institutional Class | |
| Net assets | $22,896,700 |
| Shares outstanding | 2,217,742 |
| Net asset value per share | $10.32 |
| Institutional 3 Class | |
| Net assets | $120,550,806 |
| Shares outstanding | 11,640,938 |
| Net asset value per share | $10.36 |
The accompanying Notes to Financial Statements are an integral part of this
statement.
|
Columbia
North Carolina Intermediate Municipal Bond Fund | Annual Report 2019
|
15 |
Table of Contents
Statement of Operations
Year Ended April 30, 2019
Year Ended April 30, 2019
| Net investment income | |
| Income: | |
| Dividends — unaffiliated issuers | $43,512 |
| Interest | 5,100,138 |
| Total income | 5,143,650 |
| Expenses: | |
| Management services fees | 772,484 |
| Distribution and/or service fees | |
| Class A | 41,608 |
| Class C | 44,787 |
| Transfer agent fees | |
| Class A | 15,369 |
| Advisor Class | 4,646 |
| Class C | 4,132 |
| Institutional Class | 20,567 |
| Institutional 3 Class | 8,511 |
| Compensation of board members | 15,939 |
| Custodian fees | 2,054 |
| Printing and postage fees | 10,831 |
| Registration fees | 8,906 |
| Audit fees | 33,900 |
| Legal fees | 8,303 |
| Line of credit interest | 75 |
| Compensation of chief compliance officer | 34 |
| Other | 10,701 |
| Total expenses | 1,002,847 |
| Fees waived or expenses reimbursed by Investment Manager and its affiliates | (87,803) |
| Total net expenses | 915,044 |
| Net investment income | 4,228,606 |
| Realized and unrealized gain (loss) — net | |
| Net realized gain (loss) on: | |
| Investments — unaffiliated issuers | (664,012) |
| Net realized loss | (664,012) |
| Net change in unrealized appreciation (depreciation) on: | |
| Investments — unaffiliated issuers | 3,650,732 |
| Net change in unrealized appreciation (depreciation) | 3,650,732 |
| Net realized and unrealized gain | 2,986,720 |
| Net increase in net assets resulting from operations | $7,215,326 |
The accompanying Notes to Financial Statements are an
integral part of this statement.
| 16 | Columbia North Carolina Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Statement of Changes in Net Assets
|
Year
Ended
April 30, 2019 |
Year
Ended
April 30, 2018 |
|
| Operations | ||
| Net investment income | $4,228,606 | $4,512,516 |
| Net realized gain (loss) | (664,012) | 317,651 |
| Net change in unrealized appreciation (depreciation) | 3,650,732 | (3,422,166) |
| Net increase in net assets resulting from operations | 7,215,326 | 1,408,001 |
| Distributions to shareholders | ||
| Net investment income and net realized gains | ||
| Class A | (386,015) | |
| Advisor Class | (129,125) | |
| Class C | (70,245) | |
| Institutional Class | (571,853) | |
| Institutional 3 Class | (3,071,183) | |
| Net investment income | ||
| Class A | (434,002) | |
| Advisor Class | (87,808) | |
| Class B | (43) | |
| Class C | (89,726) | |
| Institutional Class | (1,704,355) | |
| Institutional 3 Class | (2,169,888) | |
| Total distributions to shareholders (Note 2) | (4,228,421) | (4,485,822) |
| Decrease in net assets from capital stock activity | (2,156,711) | (13,745,957) |
| Total increase (decrease) in net assets | 830,194 | (16,823,778) |
| Net assets at beginning of year | 168,686,744 | 185,510,522 |
| Net assets at end of year | $169,516,938 | $168,686,744 |
| Undistributed net investment income | $736,653 | $737,022 |
The accompanying Notes to Financial Statements are an
integral part of this statement.
|
Columbia
North Carolina Intermediate Municipal Bond Fund | Annual Report 2019
|
17 |
Table of Contents
Statement of Changes in Net Assets
(continued)
| Year Ended | Year Ended | |||
| April 30, 2019 | April 30, 2018 | |||
| Shares | Dollars ($) | Shares | Dollars ($) | |
| Capital stock activity | ||||
| Class A | ||||
| Subscriptions | 169,543 | 1,722,915 | 312,821 | 3,253,670 |
| Distributions reinvested | 29,827 | 303,721 | 31,969 | 330,562 |
| Redemptions | (385,171) | (3,908,966) | (331,461) | (3,440,215) |
| Net increase (decrease) | (185,801) | (1,882,330) | 13,329 | 144,017 |
| Advisor Class | ||||
| Subscriptions | 114,600 | 1,168,726 | 393,222 | 4,073,654 |
| Distributions reinvested | 12,673 | 128,868 | 8,502 | 87,554 |
| Redemptions | (47,243) | (480,310) | (165,042) | (1,698,820) |
| Net increase | 80,030 | 817,284 | 236,682 | 2,462,388 |
| Class B | ||||
| Redemptions | — | — | (951) | (10,034) |
| Net decrease | — | — | (951) | (10,034) |
| Class C | ||||
| Subscriptions | 45,784 | 466,230 | 60,057 | 619,419 |
| Distributions reinvested | 6,105 | 62,119 | 7,823 | 80,884 |
| Redemptions | (182,233) | (1,848,463) | (187,979) | (1,951,783) |
| Net decrease | (130,344) | (1,320,114) | (120,099) | (1,251,480) |
| Institutional Class | ||||
| Subscriptions | 565,144 | 5,744,822 | 982,194 | 10,197,292 |
| Distributions reinvested | 47,597 | 484,185 | 58,965 | 609,718 |
| Redemptions | (664,773) | (6,742,706) | (14,109,130) | (147,200,886) |
| Net decrease | (52,032) | (513,699) | (13,067,971) | (136,393,876) |
| Institutional 3 Class | ||||
| Subscriptions | 4,940,478 | 50,489,350 | 14,062,000 | 146,913,622 |
| Distributions reinvested | 9,489 | 96,796 | 6,574 | 67,724 |
| Redemptions | (4,901,368) | (49,843,998) | (2,477,208) | (25,678,318) |
| Net increase | 48,599 | 742,148 | 11,591,366 | 121,303,028 |
| Total net decrease | (239,548) | (2,156,711) | (1,347,644) | (13,745,957) |
The accompanying Notes to Financial Statements are an integral part of this
statement.
| 18 | Columbia North Carolina Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
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|
Columbia
North Carolina Intermediate Municipal Bond Fund | Annual Report 2019
|
19 |
Table of Contents
Financial Highlights
The
following table is intended to help you understand the Fund’s financial performance. Certain information reflects financial results for a single share of a class held for the periods shown. Per share net investment income (loss) amounts are
calculated based on average shares outstanding during the period. Total return assumes reinvestment of all dividends and distributions, if any. Total return does not reflect payment of sales charges, if any. Total return and portfolio turnover are
not annualized for periods of less than one year. The portfolio turnover rate is calculated without regard to purchase and sales transactions of short-term instruments and certain derivatives, if any. If such transactions were included, the
Fund’s portfolio turnover rate may be higher.
|
Net
asset value,
beginning of period |
Net
investment income |
Net
realized and unrealized gain (loss) |
Total
from
investment operations |
Distributions
from net investment income |
Total
distributions to shareholders |
|
| Class A | ||||||
| Year Ended 4/30/2019 | $10.14 | 0.24 | 0.19 | 0.43 | (0.24) | (0.24) |
| Year Ended 4/30/2018 | $10.33 | 0.24 | (0.19) | 0.05 | (0.24) | (0.24) |
| Year Ended 4/30/2017 | $10.70 | 0.25 | (0.37) | (0.12) | (0.25) | (0.25) |
| Year Ended 4/30/2016 | $10.58 | 0.27 | 0.12 | 0.39 | (0.27) | (0.27) |
| Year Ended 4/30/2015 | $10.61 | 0.28 | (0.03) | 0.25 | (0.28) | (0.28) |
| Advisor Class | ||||||
| Year Ended 4/30/2019 | $10.12 | 0.26 | 0.20 | 0.46 | (0.26) | (0.26) |
| Year Ended 4/30/2018 | $10.32 | 0.27 | (0.20) | 0.07 | (0.27) | (0.27) |
| Year Ended 4/30/2017 | $10.69 | 0.28 | (0.37) | (0.09) | (0.28) | (0.28) |
| Year Ended 4/30/2016 | $10.57 | 0.30 | 0.12 | 0.42 | (0.30) | (0.30) |
| Year Ended 4/30/2015 | $10.60 | 0.31 | (0.03) | 0.28 | (0.31) | (0.31) |
| Class C | ||||||
| Year Ended 4/30/2019 | $10.13 | 0.16 | 0.20 | 0.36 | (0.16) | (0.16) |
| Year Ended 4/30/2018 | $10.33 | 0.16 | (0.20) | (0.04) | (0.16) | (0.16) |
| Year Ended 4/30/2017 | $10.70 | 0.17 | (0.37) | (0.20) | (0.17) | (0.17) |
| Year Ended 4/30/2016 | $10.58 | 0.19 | 0.12 | 0.31 | (0.19) | (0.19) |
| Year Ended 4/30/2015 | $10.61 | 0.20 | (0.03) | 0.17 | (0.20) | (0.20) |
| Institutional Class | ||||||
| Year Ended 4/30/2019 | $10.13 | 0.26 | 0.19 | 0.45 | (0.26) | (0.26) |
| Year Ended 4/30/2018 | $10.32 | 0.27 | (0.19) | 0.08 | (0.27) | (0.27) |
| Year Ended 4/30/2017 | $10.69 | 0.28 | (0.37) | (0.09) | (0.28) | (0.28) |
| Year Ended 4/30/2016 | $10.57 | 0.30 | 0.12 | 0.42 | (0.30) | (0.30) |
| Year Ended 4/30/2015 | $10.60 | 0.31 | (0.03) | 0.28 | (0.31) | (0.31) |
| Institutional 3 Class | ||||||
| Year Ended 4/30/2019 | $10.16 | 0.27 | 0.20 | 0.47 | (0.27) | (0.27) |
| Year Ended 4/30/2018 | $10.35 | 0.28 | (0.19) | 0.09 | (0.28) | (0.28) |
| Year Ended 4/30/2017 (d) | $10.28 | 0.05 | 0.07 (e) | 0.12 | (0.05) | (0.05) |
| Notes to Financial Highlights | |
| (a) | In addition to the fees and expenses that the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of any other funds in which it invests. Such indirect expenses are not included in the Fund’s reported expense ratios. |
| (b) | Total net expenses include the impact of certain fee waivers/expense reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
| (c) | Ratios include line of credit interest expense which is less than 0.01%. |
| (d) | Institutional 3 Class shares commenced operations on March 1, 2017. Per share data and total return reflect activity from that date. |
| (e) | Calculation of the net gain (loss) per share (both realized and unrealized) does not correlate to the aggregate realized and unrealized gain (loss) presented in the Statement of Operations due to the timing of subscriptions and redemptions of Fund shares in relation to fluctuations in the market value of the portfolio. |
| (f) | Annualized. |
The accompanying Notes to Financial Statements are an integral
part of this statement.
| 20 | Columbia North Carolina Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Financial Highlights
(continued)
|
Net
asset value, end of period |
Total
return |
Total
gross
expense ratio to average net assets (a) |
Total
net
expense ratio to average net assets (a),(b) |
Net
investment
income ratio to average net assets |
Portfolio
turnover |
Net
assets, end of period (000’s) |
|
| Class A | |||||||
| Year Ended 4/30/2019 | $10.33 | 4.26% | 0.87% (c) | 0.81% (c) | 2.32% | 23% | $16,469 |
| Year Ended 4/30/2018 | $10.14 | 0.48% | 0.88% | 0.81% | 2.33% | 10% | $18,035 |
| Year Ended 4/30/2017 | $10.33 | (1.11%) | 0.96% | 0.81% | 2.39% | 12% | $18,246 |
| Year Ended 4/30/2016 | $10.70 | 3.77% | 0.97% | 0.81% | 2.57% | 11% | $27,616 |
| Year Ended 4/30/2015 | $10.58 | 2.41% | 0.98% | 0.81% | 2.67% | 6% | $24,948 |
| Advisor Class | |||||||
| Year Ended 4/30/2019 | $10.32 | 4.62% | 0.62% (c) | 0.56% (c) | 2.57% | 23% | $5,505 |
| Year Ended 4/30/2018 | $10.12 | 0.63% | 0.63% | 0.56% | 2.57% | 10% | $4,589 |
| Year Ended 4/30/2017 | $10.32 | (0.86%) | 0.71% | 0.56% | 2.64% | 12% | $2,236 |
| Year Ended 4/30/2016 | $10.69 | 4.03% | 0.72% | 0.56% | 2.83% | 11% | $3,458 |
| Year Ended 4/30/2015 | $10.57 | 2.67% | 0.74% | 0.56% | 2.92% | 6% | $3,675 |
| Class C | |||||||
| Year Ended 4/30/2019 | $10.33 | 3.58% | 1.62% (c) | 1.56% (c) | 1.57% | 23% | $4,096 |
| Year Ended 4/30/2018 | $10.13 | (0.38%) | 1.63% | 1.56% | 1.58% | 10% | $5,338 |
| Year Ended 4/30/2017 | $10.33 | (1.85%) | 1.71% | 1.56% | 1.65% | 12% | $6,682 |
| Year Ended 4/30/2016 | $10.70 | 3.00% | 1.73% | 1.56% | 1.82% | 11% | $8,023 |
| Year Ended 4/30/2015 | $10.58 | 1.65% | 1.73% | 1.56% | 1.92% | 6% | $7,227 |
| Institutional Class | |||||||
| Year Ended 4/30/2019 | $10.32 | 4.52% | 0.62% (c) | 0.56% (c) | 2.57% | 23% | $22,897 |
| Year Ended 4/30/2018 | $10.13 | 0.72% | 0.65% | 0.56% | 2.55% | 10% | $22,984 |
| Year Ended 4/30/2017 | $10.32 | (0.86%) | 0.71% | 0.56% | 2.65% | 12% | $158,327 |
| Year Ended 4/30/2016 | $10.69 | 4.03% | 0.73% | 0.56% | 2.82% | 11% | $191,661 |
| Year Ended 4/30/2015 | $10.57 | 2.67% | 0.73% | 0.56% | 2.92% | 6% | $149,878 |
| Institutional 3 Class | |||||||
| Year Ended 4/30/2019 | $10.36 | 4.70% | 0.53% (c) | 0.48% (c) | 2.65% | 23% | $120,551 |
| Year Ended 4/30/2018 | $10.16 | 0.83% | 0.54% | 0.48% | 2.68% | 10% | $117,741 |
| Year Ended 4/30/2017 (d) | $10.35 | 1.15% | 0.55% (f) | 0.42% (f) | 2.87% (f) | 12% | $10 |
The accompanying Notes to Financial Statements are an integral part of this
statement.
|
Columbia
North Carolina Intermediate Municipal Bond Fund | Annual Report 2019
|
21 |
Table of Contents
Notes to Financial Statements
April 30, 2019
April 30, 2019
Note 1. Organization
Columbia North Carolina Intermediate Municipal Bond Fund
(formerly known as Columbia AMT-Free North Carolina Intermediate Muni Bond Fund) (the Fund), a series of Columbia Funds Series Trust (the Trust), is a diversified fund. The Trust is registered under the Investment Company Act of 1940, as amended
(the 1940 Act), as an open-end management investment company organized as a Delaware statutory trust.
Effective May 14, 2019, Columbia AMT-Free North Carolina
Intermediate Muni Bond Fund was renamed Columbia North Carolina Intermediate Municipal Bond Fund.
Fund shares
The Trust may issue an unlimited number of shares (without par
value). Although all share classes generally have identical voting, dividend and liquidation rights, each share class votes separately when required by the Trust’s organizational documents or by law. Different share classes pay different
distribution amounts to the extent the expenses of such share classes differ, and distributions in liquidation will be proportional to the net asset value of each share class. Each share class has its own expense and sales charge structure. The Fund
offers each of the share classes identified below.
Class
A shares are subject to a maximum front-end sales charge of 3.00% based on the initial investment amount. Class A shares purchased without an initial sales charge are subject to a contingent deferred sales charge (CDSC) of 0.75% on certain
investments of $500,000 or more if redeemed within 12 months after purchase.
Advisor Class shares are not subject to sales charges and are
generally available only to omnibus retirement plans and certain investors as described in the Fund’s prospectus.
Class C shares are subject to a 1.00% CDSC on shares redeemed
within 12 months after purchase. Effective July 1, 2018, Class C shares automatically convert to Class A shares of the same Fund in the month of or the month following the 10-year anniversary of the Class C shares purchase date.
Institutional Class shares are not subject to sales charges
and are generally available only to eligible investors, which are subject to different investment minimums as described in the Fund’s prospectus.
Institutional 3 Class shares are not subject to sales charges
and are available to institutional and certain other investors as described in the Fund’s prospectus.
Note 2. Summary of significant accounting
policies
Basis of preparation
The Fund is an investment company that applies the accounting
and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946,
Financial Services - Investment Companies
(ASC 946). The financial statements are prepared
in accordance with U.S. generally accepted accounting principles (GAAP), which requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
The following is a summary of significant accounting policies
followed by the Fund in the preparation of its financial statements.
Security valuation
Debt securities generally are valued by pricing services
approved by the Board of Trustees based upon market transactions for normal, institutional-size trading units of similar securities. The services may use various pricing techniques that take into account, as applicable, factors such as yield,
quality, coupon rate, maturity, type of issue, trading characteristics and other data, as well as approved independent broker-dealer quotes. Debt securities for which quotations are not readily available or
| 22 | Columbia North Carolina Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Notes to Financial Statements
(continued)
April 30, 2019
April 30, 2019
not believed to be
reflective of market value may also be valued based upon a bid quote from an approved independent broker-dealer. Debt securities maturing in 60 days or less are valued primarily at amortized cost value, unless this method results in a valuation that
management believes does not approximate market value.
Investments in open-end investment companies, including money
market funds, are valued at their latest net asset value.
Investments for which market quotations are not readily
available, or that have quotations which management believes are not reflective of market value or reliable, are valued at fair value as determined in good faith under procedures approved by and under the general supervision of the Board of
Trustees. If a security or class of securities (such as foreign securities) is valued at fair value, such value is likely to be different from the quoted or published price for the security.
The determination of fair value often requires significant
judgment. To determine fair value, management may use assumptions including but not limited to future cash flows and estimated risk premiums. Multiple inputs from various sources may be used to determine fair value.
GAAP requires disclosure regarding the inputs and valuation
techniques used to measure fair value and any changes in valuation inputs or techniques. In addition, investments shall be disclosed by major category. This information is disclosed following the Fund’s Portfolio of Investments.
Delayed delivery securities
The Fund may trade securities on other than normal settlement
terms, including securities purchased or sold on a “when-issued” or "forward commitment" basis. This may increase risk to the Fund since the other party to the transaction may fail to deliver, which could cause the Fund to subsequently
invest at less advantageous prices. The Fund designates cash or liquid securities in an amount equal to the delayed delivery commitment.
Security transactions
Security transactions are accounted for on the trade date.
Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes.
Income recognition
Interest income is recorded on an accrual basis. Market
premiums and discounts, including original issue discounts, are amortized and accreted, respectively, over the expected life of the security on all debt securities, unless otherwise noted.
The Fund may place a debt security on non-accrual status and
reduce related interest income when it becomes probable that the interest will not be collected and the amount of uncollectible interest can be reasonably estimated. A defaulted debt security is removed from non-accrual status when the issuer
resumes interest payments or when collectibility of interest is reasonably assured.
Dividend income is recorded on the ex-dividend date.
Expenses
General expenses of the Trust are allocated to the Fund and
other funds of the Trust based upon relative net assets or other expense allocation methodologies determined by the nature of the expense. Expenses directly attributable to the Fund are charged to the Fund. Expenses directly attributable to a
specific class of shares are charged to that share class.
Determination of class net asset value
All income, expenses (other than class-specific expenses,
which are charged to that share class, as shown in the Statement of Operations) and realized and unrealized gains (losses) are allocated to each class of the Fund on a daily basis, based on the relative net assets of each class, for purposes of
determining the net asset value of each class.
|
Columbia
North Carolina Intermediate Municipal Bond Fund | Annual Report 2019
|
23 |
Table of Contents
Notes to Financial Statements
(continued)
April 30, 2019
April 30, 2019
Federal income tax status
The Fund intends to qualify each year as a regulated
investment company under Subchapter M of the Internal Revenue Code, as amended, and will distribute substantially all of its net tax-exempt and investment company taxable income and net capital gain, if any, for its tax year, and as such will not be
subject to federal income taxes. In addition, the Fund intends to distribute in each calendar year substantially all of its ordinary income, capital gain net income and certain other amounts, if any, such that the Fund should not be subject to
federal excise tax. Therefore, no federal income or excise tax provision is recorded.
Distributions to shareholders
Distributions from net investment income, if any, are declared
daily and paid monthly. Net realized capital gains, if any, are distributed at least annually. Income distributions and capital gain distributions are determined in accordance with federal income tax regulations, which may differ from GAAP.
Guarantees and indemnifications
Under the Trust’s organizational documents and, in some
cases, by contract, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust or its funds. In addition, certain of the Fund’s contracts with its service providers contain
general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown since the amount of any future claims that may be made against the Fund cannot be determined, and the Fund has no historical basis for predicting
the likelihood of any such claims.
Recent accounting
pronouncements
Accounting Standards Update 2017-08
Premium Amortization on Purchased Callable Debt Securities
In March 2017, the Financial Accounting Standards Board issued
Accounting Standards Update (ASU) No. 2017-08 Premium Amortization on Purchased Callable Debt Securities. ASU No. 2017-08 updates the accounting standards to shorten the amortization period for certain purchased callable debt securities, held at a
premium, to be amortized to the earliest call date. The update applies to securities with explicit, noncontingent call features that are callable at fixed prices and on preset dates. The standard is effective for annual periods beginning after
December 15, 2018 and interim periods within those fiscal years. Management does not expect the implementation of this guidance to have a material impact on the financial statement amounts and footnote disclosures.
Accounting Standards Update 2018-13 Disclosure Framework -
Changes to the Disclosure Requirements for Fair Value Measurement
In August 2018, the Financial Accounting Standards Board
issued Accounting Standards Update (ASU) No. 2018-13 Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. ASU No. 2018-13, in addition to other modifications and additions, removes the requirement to disclose the
amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy and the policy for the timing of transfers between levels. The standard is effective for annual periods beginning after December 15, 2019 and interim periods
within those fiscal years. At this time, management is evaluating the implication of this guidance and the impact it will have on the financial statement disclosures, if any.
Disclosure Update and Simplification
In September 2018, the Securities and Exchange Commission
(SEC) released Final Rule 33-10532, Disclosure Update and Simplification, which amends certain financial statement disclosure requirements that the SEC determined to be redundant, outdated, or superseded in light of other SEC disclosure
requirements, GAAP, or changes in the information environment. As a result of the amendments, management implemented disclosure changes which included removing the components of distributable earnings presented on the Statement of Assets and
Liabilities and combining income and gain distributions paid to shareholders as presented on the Statement of Changes in Net Assets. Any values presented to meet prior year requirements were left unchanged. The amendments had no effect on the
Fund’s net assets or results of operation.
| 24 | Columbia North Carolina Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Notes to Financial Statements
(continued)
April 30, 2019
April 30, 2019
Note 3. Fees and other transactions with
affiliates
Management services fees
The Fund has entered into a Management Agreement with Columbia
Management Investment Advisers, LLC (the Investment Manager), a wholly-owned subsidiary of Ameriprise Financial, Inc. (Ameriprise Financial). Under the Management Agreement, the Investment Manager provides the Fund with investment research and
advice, as well as administrative and accounting services. The management services fee is an annual fee that is equal to a percentage of the Fund’s daily net assets that declines from 0.47% to 0.31% as the Fund’s net assets increase. The
effective management services fee rate for the year ended April 30, 2019 was 0.47% of the Fund’s average daily net assets.
Compensation of board members
Members of the Board of Trustees who are not officers or
employees of the Investment Manager or Ameriprise Financial are compensated for their services to the Fund as disclosed in the Statement of Operations. Under a Deferred Compensation Plan (the Deferred Plan), these members of the Board of Trustees
may elect to defer payment of up to 100% of their compensation. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of certain funds managed by the Investment Manager. The Fund’s liability for these
amounts is adjusted for market value changes and remains in the Fund until distributed in accordance with the Deferred Plan. All amounts payable under the Deferred Plan constitute a general unsecured obligation of the Fund.
Compensation of Chief Compliance Officer
The Board of Trustees has appointed a Chief Compliance Officer
to the Fund in accordance with federal securities regulations. As disclosed in the Statement of Operations, a portion of the Chief Compliance Officer’s total compensation is allocated to the Fund, along with other allocations to affiliated
registered investment companies managed by the Investment Manager and its affiliates, based on relative net assets.
Transfer agency fees
Under a Transfer and Dividend Disbursing Agent Agreement,
Columbia Management Investment Services Corp. (the Transfer Agent), an affiliate of the Investment Manager and a wholly-owned subsidiary of Ameriprise Financial, is responsible for providing transfer agency services to the Fund. The Transfer Agent
has contracted with DST Asset Manager Solutions, Inc. (DST) to serve as sub-transfer agent. The Transfer Agent pays the fees of DST for services as sub-transfer agent and DST is not entitled to reimbursement for such fees from the Fund (with the
exception of out-of-pocket fees).
The Fund pays the
Transfer Agent a monthly transfer agency fee based on the number or the average value of accounts, depending on the type of account. In addition, the Fund pays the Transfer Agent a fee for shareholder services based on the number of accounts or on a
percentage of the average aggregate value of the Fund’s shares maintained in omnibus accounts up to the lesser of the amount charged by the financial intermediary or a cap established by the Board of Trustees from time to time.
The Transfer Agent also receives compensation from the Fund
for various shareholder services and reimbursements for certain out-of-pocket fees. Total transfer agency fees for Institutional 3 Class shares are subject to an annual limitation of not more than 0.02% of the average daily net assets attributable
to Institutional 3 Class shares.
For the year ended
April 30, 2019, the Fund’s effective transfer agency fee rates as a percentage of average daily net assets of each class were as follows:
|
Columbia
North Carolina Intermediate Municipal Bond Fund | Annual Report 2019
|
25 |
Table of Contents
Notes to Financial Statements
(continued)
April 30, 2019
April 30, 2019
An
annual minimum account balance fee of $20 may apply to certain accounts with a value below the applicable share class’s initial minimum investment requirements to reduce the impact of small accounts on transfer agency fees. These minimum
account balance fees are remitted to the Fund and recorded as part of expense reductions in the Statement of Operations. For the year ended April 30, 2019, no minimum account balance fees were charged by the Fund.
Distribution and service fees
The Fund has entered into an agreement with Columbia
Management Investment Distributors, Inc. (the Distributor), an affiliate of the Investment Manager and a wholly-owned subsidiary of Ameriprise Financial, for distribution and shareholder services. The Board of Trustees has approved, and the Fund has
adopted, distribution and shareholder service plans (the Plans) applicable to certain share classes, which set the distribution and service fees for the Fund. These fees are calculated daily and are intended to compensate the Distributor and/or
eligible selling and/or servicing agents for selling shares of the Fund and providing services to investors.
Under the Plans, the Fund pays a monthly combined distribution
and service fee to the Distributor at the maximum annual rate of 0.25% of the average daily net assets attributable to Class A shares of the Fund. Also under the Plans, the Fund pays a monthly service fee to the Distributor at the maximum annual
rate of 0.25% of the average daily net assets attributable to Class C shares of the Fund and a monthly distribution fee to the Distributor at the maximum annual rate of 0.75% of the average daily net assets attributable to Class C shares of the
Fund.
Sales charges (unaudited)
Sales charges, including front-end charges and CDSCs, received
by the Distributor for distributing Fund shares for the year ended April 30, 2019, if any, are listed below:
| Amount ($) | |
| Class A | 1,620 |
| Class C | 1,438 |
Expenses waived/reimbursed by the
Investment Manager and its affiliates
The Investment
Manager and certain of its affiliates have contractually agreed to waive fees and/or reimburse expenses (excluding certain fees and expenses described below) for the period(s) disclosed below, unless sooner terminated at the sole discretion of the
Board of Trustees, so that the Fund’s net operating expenses, after giving effect to fees waived/expenses reimbursed and any balance credits and/or overdraft charges from the Fund’s custodian, do not exceed the following annual rate(s)
as a percentage of the class’ average daily net assets:
|
September
1, 2018
through August 31, 2019 |
Prior
to
September 1, 2018 |
|
| Class A | 0.81% | 0.81% |
| Advisor Class | 0.56 | 0.56 |
| Class C | 1.56 | 1.56 |
| Institutional Class | 0.56 | 0.56 |
| Institutional 3 Class | 0.48 | 0.49 |
Under the agreement governing
these fee waivers and/or expense reimbursement arrangements, the following fees and expenses are excluded from the waiver/reimbursement commitment, and therefore will be paid by the Fund, if applicable: taxes (including foreign transaction taxes),
expenses associated with investments in affiliated and non-affiliated pooled investment vehicles (including mutual funds and exchange-traded funds), transaction costs and brokerage commissions, costs related to any securities lending program,
dividend expenses associated with securities sold short, inverse floater program fees and expenses, transaction charges and interest on borrowed money, interest, infrequent and/or unusual expenses and any other expenses the exclusion of which is
specifically approved by the Board of Trustees. This agreement may be modified or amended only with approval from the Investment Manager, certain of its affiliates and the Fund. Any fees waived and/or expenses reimbursed under the expense
reimbursement arrangements described above are not recoverable by the Investment Manager or its affiliates in future periods.
| 26 | Columbia North Carolina Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Notes to Financial Statements
(continued)
April 30, 2019
April 30, 2019
Note 4. Federal tax information
The timing and character of income and capital gain
distributions are determined in accordance with income tax regulations, which may differ from GAAP because of temporary or permanent book to tax differences.
At April 30, 2019, these differences were primarily due to
differing treatment for capital loss carryforwards, trustees’ deferred compensation, distributions and principal and/or interest from fixed income securities. To the extent these differences were permanent, reclassifications were made among
the components of the Fund’s net assets. Temporary differences do not require reclassifications.
The following reclassifications were made:
|
Undistributed
net
investment income ($) |
Accumulated
net realized (loss) ($) |
Paid
in
capital ($) |
| (554) | 554 | — |
Net investment income (loss) and
net realized gains (losses), as disclosed in the Statement of Operations, and net assets were not affected by this reclassification.
The tax character of distributions paid during the years
indicated was as follows:
| Year Ended April 30, 2019 | Year Ended April 30, 2018 | ||||||
|
Ordinary
income ($) |
Tax-exempt
income ($) |
Long-term
capital gains ($) |
Total ($) |
Ordinary
income ($) |
Tax-exempt
income ($) |
Long-term
capital gains ($) |
Total ($) |
| 22 | 4,228,399 | — | 4,228,421 | 2 | 4,485,820 | — | 4,485,822 |
Short-term capital gain
distributions, if any, are considered ordinary income distributions for tax purposes.
At April 30, 2019, the components of distributable earnings on
a tax basis were as follows:
|
Undistributed
ordinary income ($) |
Undistributed
tax-
exempt income ($) |
Undistributed
long-term capital gains ($) |
Capital
loss
carryforwards ($) |
Net
unrealized
appreciation ($) |
| — | 1,171,096 | — | (1,187,176) | 5,855,170 |
At April 30, 2019, the cost of all
investments for federal income tax purposes along with the aggregate gross unrealized appreciation and depreciation based on that cost was:
|
Federal
tax cost ($) |
Gross
unrealized
appreciation ($) |
Gross
unrealized
(depreciation) ($) |
Net
unrealized
appreciation ($) |
| 162,464,811 | 5,884,241 | (29,071) | 5,855,170 |
Tax cost of investments and
unrealized appreciation/(depreciation) may also include timing differences that do not constitute adjustments to tax basis.
The following capital loss carryforwards, determined at April
30, 2019, may be available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code. Capital loss carryforwards with no expiration are required to be utilized prior
to any capital losses which carry an expiration date. As a result of this ordering rule, capital loss carryforwards which carry an expiration date may be more likely to expire unused. In addition, for the year ended April 30, 2019, capital loss
carryforwards utilized and expired unused, if any, were as follows:
|
No
expiration
short-term ($) |
No
expiration
long-term ($) |
Total ($) | Utilized ($) | Expired ($) |
| 528,605 | 658,571 | 1,187,176 | — | — |
|
Columbia
North Carolina Intermediate Municipal Bond Fund | Annual Report 2019
|
27 |
Table of Contents
Notes to Financial Statements
(continued)
April 30, 2019
April 30, 2019
Management of the Fund has concluded that there are no
significant uncertain tax positions in the Fund that would require recognition in the financial statements. However, management’s conclusion may be subject to review and adjustment at a later date based on factors including, but not limited
to, new tax laws, regulations, and administrative interpretations (including relevant court decisions). Generally, the Fund’s federal tax returns for the prior three fiscal years remain subject to examination by the Internal Revenue
Service.
Note 5. Portfolio information
The cost of purchases and proceeds from sales of securities,
excluding short-term investments and derivatives, if any, aggregated to $40,926,945 and $37,355,521, respectively, for the year ended April 30, 2019. The amount of purchase and sale activity impacts the portfolio turnover rate reported in the
Financial Highlights.
Note 6. Interfund
lending
Pursuant to an exemptive order granted by the
Securities and Exchange Commission, the Fund participates in a program (the Interfund Program) allowing each participating Columbia Fund (each, a Participating Fund) to lend money directly to and, except for closed-end funds and money market funds,
borrow money directly from other Participating Funds for temporary purposes. The amounts eligible for borrowing and lending under the Interfund Program are subject to certain restrictions.
Interfund loans are subject to the risk that the borrowing
fund could be unable to repay the loan when due, and a delay in repayment to the lending fund could result in lost opportunities and/or additional lending costs. The exemptive order is subject to conditions intended to mitigate conflicts of interest
arising from the Investment Manager’s relationship with each Participating Fund.
The Fund did not borrow or lend money under the Interfund
Program during the year ended April 30, 2019.
Note
7. Line of credit
The Fund has access to a
revolving credit facility with a syndicate of banks led by Citibank, N.A., HSBC Bank USA, N.A. and JPMorgan Chase Bank, N.A. whereby the Fund may borrow for the temporary funding of shareholder redemptions or for other temporary or emergency
purposes. The credit facility, which is a collective agreement between the Fund and certain other funds managed by the Investment Manager or an affiliated investment manager, severally and not jointly, permits collective borrowings up to $1 billion.
Interest is charged to each participating fund based on its borrowings at a rate equal to the higher of (i) the federal funds effective rate, (ii) the one-month LIBOR rate and (iii) the overnight bank funding rate, plus in each case, 1.00%. Each
borrowing under the credit facility matures no later than 60 days after the date of borrowing. The Fund also pays a commitment fee equal to its pro rata share of the unused amount of the credit facility at a rate of 0.15% per annum. The commitment
fee is included in other expenses in the Statement of Operations. This agreement expires annually in December unless extended or renewed.
For the year ended April 30, 2019, the Fund’s borrowing
activity was as follows:
|
Average
loan
balance ($) |
Weighted
average
interest rate (%) |
Days
outstanding |
| 400,000 | 3.39 | 2 |
Interest expense incurred by the
Fund is recorded as a line of credit interest expense in the Statement of Operations. The Fund had no outstanding borrowings at April 30, 2019.
Note 8. Significant risks
Credit risk
Credit risk is the risk that the value of debt securities in
the Fund’s portfolio may decline because the issuer may default and fail to pay interest or repay principal when due. Rating agencies assign credit ratings to debt securities to indicate their credit risk. Lower rated or unrated debt
securities held by the Fund may present increased credit risk as compared to higher-rated debt securities.
| 28 | Columbia North Carolina Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Notes to Financial Statements
(continued)
April 30, 2019
April 30, 2019
Geographic concentration risk
Because the Fund invests substantially in municipal securities
issued by the state identified in the Fund’s name and political sub-divisions of that state, the Fund will be particularly affected by adverse tax, legislative, regulatory, demographic or political changes as well as changes impacting the
state’s financial, economic or other condition and prospects. In addition, because of the relatively small number of issuers of tax-exempt securities in the state, the Fund may invest a higher percentage of assets in a single issuer and,
therefore, be more exposed to the risk of loss than a fund that invests more broadly. The value of municipal and other securities owned by the Fund also may be adversely affected by future changes in federal or state income tax laws.
Interest rate risk
Interest rate risk is the risk of losses attributable to
changes in interest rates. In general, if prevailing interest rates rise, the values of debt securities tend to fall, and if interest rates fall, the values of debt securities tend to rise. Actions by governments and central banking authorities can
result in increases in interest rates. Increasing interest rates may negatively affect the value of debt securities held by the Fund, resulting in a negative impact on the Fund’s performance and net asset value per share. In general, the
longer the maturity or duration of a debt security, the greater its sensitivity to changes in interest rates.
Liquidity risk
Liquidity risk is the risk associated with a lack of
marketability of investments which may make it difficult to sell the investment at a desirable time or price. Changing regulatory, market or other conditions or environments (for example, the interest rate or credit environments) may adversely
affect the liquidity of the Fund’s investments. The Fund may have to accept a lower selling price for the holding, sell other investments, or forego another, more appealing investment opportunity. Generally, the less liquid the market at the
time the Fund sells a portfolio investment, the greater the risk of loss or decline of value to the Fund. A less liquid market can lead to an increase in Fund redemptions, which may negatively impact Fund performance and net asset value per share,
including, for example, if the Fund is forced to sell securities in a down market.
Shareholder concentration risk
At April 30, 2019, two unaffiliated shareholders of record
owned 84.2% of the outstanding shares of the Fund in one or more accounts. The Fund has no knowledge about whether any portion of those shares was owned beneficially. Subscription and redemption activity by concentrated accounts may have a
significant effect on the operations of the Fund. In the case of a large redemption, the Fund may be forced to sell investments at inopportune times, including its liquid positions, which may result in Fund losses and the Fund holding a higher
percentage of less liquid positions. Large redemptions could result in decreased economies of scale and increased operating expenses for non-redeeming Fund shareholders.
Note 9. Subsequent events
Management has evaluated the events and transactions that
have occurred through the date the financial statements were issued and noted no items requiring adjustment of the financial statements or additional disclosure.
Note 10. Information regarding pending and settled
legal proceedings
Ameriprise Financial and certain of
its affiliates have historically been involved in a number of legal, arbitration and regulatory proceedings, including routine litigation, class actions, and governmental actions, concerning matters arising in connection with the conduct of their
business activities. Ameriprise Financial believes that the Fund is not currently the subject of, and that neither Ameriprise Financial nor any of its affiliates are the subject of, any pending legal, arbitration or regulatory proceedings that are
likely to have a material adverse effect on the Fund or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Fund. Ameriprise Financial is required to make quarterly (10-Q), annual (10-K) and, as necessary,
8-K filings with the Securities and Exchange Commission (SEC) on legal and regulatory matters that relate to Ameriprise Financial and its affiliates. Copies of these filings may be obtained by accessing the SEC website at www.sec.gov.
There can be no assurance that these matters, or the adverse
publicity associated with them, will not result in increased Fund redemptions, reduced sale of Fund shares or other adverse consequences to the Fund. Further, although we believe proceedings are not likely to have a material adverse effect on the
Fund or the ability of Ameriprise Financial or its affiliates to
|
Columbia
North Carolina Intermediate Municipal Bond Fund | Annual Report 2019
|
29 |
Table of Contents
Notes to Financial Statements
(continued)
April 30, 2019
April 30, 2019
perform under their
contracts with the Fund, these proceedings are subject to uncertainties and, as such, we are unable to estimate the possible loss or range of loss that may result. An adverse outcome in one or more of these proceedings could result in adverse
judgments, settlements, fines, penalties or other relief that could have a material adverse effect on the consolidated financial condition or results of operations of Ameriprise Financial.
| 30 | Columbia North Carolina Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Report of Independent Registered Public Accounting Firm
To the
Board of Trustees of Columbia Funds Series Trust and Shareholders of Columbia North Carolina Intermediate Municipal Bond Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and
liabilities, including the portfolio of investments, of Columbia North Carolina Intermediate Municipal Bond Fund (formerly known as Columbia AMT-Free North Carolina Intermediate Muni Bond Fund) (one of the funds constituting Columbia Funds Series
Trust, referred to hereafter as the "Fund") as of April 30, 2019, the related statement of operations for the year ended April 30, 2019, the statement of changes in net assets for each of the two years in the period ended April 30, 2019, including
the related notes, and the financial highlights for each of the periods indicated therein (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the
financial position of the Fund as of April 30, 2019, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended April 30, 2019 and the financial highlights for each of the
periods indicated therein in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the
Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB)
and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in
accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks
of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation
of securities owned as of April 30, 2019 by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our
opinion.
/s/PricewaterhouseCoopers LLP
Minneapolis, Minnesota
June 21, 2019
We have served as the auditor of one or more investment
companies within the Columbia Funds Complex since 1977.
|
Columbia
North Carolina Intermediate Municipal Bond Fund | Annual Report 2019
|
31 |
Table of Contents
Federal Income Tax Information
(Unaudited)
(Unaudited)
The Fund hereby designates the following tax attributes for
the fiscal year ended April 30, 2019. Shareholders will be notified in early 2020 of the amounts for use in preparing 2019 income tax returns.
|
Exempt-
interest dividends |
|
| 100.00% |
Exempt-interest dividends. The percentage of net investment
income distributed during the fiscal year that qualifies as exempt-interest dividends for federal income tax purposes.
| 32 | Columbia North Carolina Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
TRUSTEES AND OFFICERS
The
Board oversees the Fund’s operations and appoints officers who are responsible for day-to-day business decisions based on policies set by the Board. The following table provides basic biographical information about the Fund’s Trustees as
of the printing of this report, including their principal occupations during the past five years, although specific titles for individuals may have varied over the period. Under current Board policy, Trustees not affiliated with the Investment
Manager generally may serve through the end of the calendar year in which they reach the mandatory retirement age established by the Board.
Independent trustees
|
Name,
address, year of birth |
Position
held
with the Trust and length of service |
Principal
occupation(s)
during past five years and other relevant professional experience |
Number
of
Funds in the Columbia Funds complex overseen |
Other
directorships
held by Trustee during the past five years |
|
George
S. Batejan
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1953 |
Trustee since 1/17 | Executive Vice President, Global Head of Technology and Operations, Janus Capital Group, Inc., 2010-2016 | 119 | Former Chairman of the Board, NICSA (National Investment Company Services Association) (Executive Committee, Nominating Committee and Governance Committee), 2014-2016; former Director, Intech Investment Management, 2011-2016; former Board Member, Metro Denver Chamber of Commerce, 2015-2016; former Advisory Board Member, University of Colorado Business School, 2015-2018 |
|
Kathleen
Blatz
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1954 |
Trustee since 1/06 for RiverSource Funds and since 6/11 for Nations Funds | Attorney; specializing in arbitration and mediation; Chief Justice, Minnesota Supreme Court, 1998-2006; Associate Justice, Minnesota Supreme Court, 1996-1998; Fourth Judicial District Court Judge, Hennepin County, 1994-1996; Attorney in private practice and public service, 1984-1993; State Representative, Minnesota House of Representatives, 1979-1993, which included service on the Tax and Financial Institutions and Insurance Committees; Member and Interim Chair, Minnesota Sports Facilities Authority, January 2017-July 2017; Interim President and Chief Executive Officer, Blue Cross and Blue Shield of Minnesota (health care insurance), February-July 2018 | 119 | Trustee, BlueCross BlueShield of Minnesota since 2009 (Chair of the Business Development Committee, 2014-2017; Chair of the Governance Committee since 2017); Chair of the Robina Foundation since August 2013; former Member and Chair of the Board, Minnesota Sports Facilities Authority, January 2017-July 2017 |
|
Edward
J. Boudreau, Jr.
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1944 |
Chair of the Board since 1/18; Trustee since 6/11 for RiverSource Funds and since 1/05 for Nations Funds | Managing Director, E.J. Boudreau & Associates (consulting) since 2000; FINRA Industry Arbitrator, 2002-present; Chairman and Chief Executive Officer, John Hancock Investments (asset management), Chairman and Interested Trustee for open-end and closed-end funds offered by John Hancock, 1989-2000; John Hancock Mutual Life Insurance Company, including Senior Vice President and Treasurer and Senior Vice President Information Technology, 1968-1988 | 119 | Former Trustee, Boston Museum of Science (Chair of Finance Committee) 1985-2013; former Trustee, BofA Funds Series Trust (11 funds), 2005-2011 |
|
Columbia
North Carolina Intermediate Municipal Bond Fund | Annual Report 2019
|
33 |
Table of Contents
TRUSTEES AND OFFICERS
(continued)
Independent trustees
(continued)
|
Name,
address, year of birth |
Position
held
with the Trust and length of service |
Principal
occupation(s)
during past five years and other relevant professional experience |
Number
of
Funds in the Columbia Funds complex overseen |
Other
directorships
held by Trustee during the past five years |
|
Pamela
G. Carlton
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1954 |
Trustee since 7/07 for RiverSource Funds and since 6/11 for Nations Funds | President, Springboard — Partners in Cross Cultural Leadership (consulting company) since 2003; Managing Director of US Equity Research, JP Morgan Chase, 1999-2003; Director of US Equity Research, Chase Asset Management, 1996-1999; Co-Director Latin America Research, 1993-1996, COO Global Research, 1992-1996, Co-Director of US Research, 1991-1992, Investment Banker, Morgan Stanley, 1982-1991 | 119 | Trustee, New York Presbyterian Hospital Board (Executive Committee and Chair of Human Resources Committee) since 1996; Director, Laurel Road Bank (Audit Committee) since 2017 |
|
Patricia
M. Flynn
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1950 |
Trustee since 11/04 for RiverSource Funds and since 6/11 for Nations Funds | Trustee Professor of Economics and Management, Bentley University since 1976 (also teaches and conducts research on corporate governance); Dean, McCallum Graduate School of Business, Bentley University, 1992-2002 | 119 | Trustee, MA Taxpayers Foundation since 1997; Board of Directors, The MA Business Roundtable since 2003; Board of Governors, Innovation Institute, MA Technology Collaborative since 2010 |
|
Brian
J. Gallagher
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1954 |
Trustee since 12/17 | Retired; Partner with Deloitte & Touche LLP and its predecessors, 1977-2016 | 117 | Trustee, Catholic Schools Foundation since 2004 |
|
Catherine
James Paglia
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1952 |
Trustee since 11/04 for RiverSource Funds and since 6/11 for Nations Funds | Director, Enterprise Asset Management, Inc. (private real estate and asset management company) since September 1998; Managing Director and Partner, Interlaken Capital, Inc., 1989-1997; Managing Director, Morgan Stanley, 1982-1989; Vice President, Investment Banking, 1980-1982, Associate, Investment Banking, 1976-1980, Dean Witter Reynolds, Inc. | 119 | Director, Valmont Industries, Inc. (irrigation systems manufacturer) since 2012; Trustee, Carleton College (on the Investment Committee); Trustee, Carnegie Endowment for International Peace (on the Investment Committee) |
|
Anthony
M. Santomero
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1946 |
Trustee since 6/11 for RiverSource Funds and since 1/08 for Nations Funds | Richard K. Mellon Professor Emeritus of Finance, The Wharton School, University of Pennsylvania, since 2002; Senior Advisor, McKinsey & Company (consulting), 2006-2008; President, Federal Reserve Bank of Philadelphia, 2000- 2006; Professor of Finance, The Wharton School, University of Pennsylvania, 1972-2002 | 119 | Trustee, Penn Mutual Life Insurance Company since March 2008; Director, Renaissance Reinsurance Ltd. since May 2008; former Trustee, BofA Funds Series Trust (11 funds), 2008-2011; former Director, Citigroup Inc. and Citibank, N.A., 2009-2019 |
| 34 | Columbia North Carolina Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
TRUSTEES AND OFFICERS
(continued)
Independent trustees
(continued)
|
Name,
address, year of birth |
Position
held
with the Trust and length of service |
Principal
occupation(s)
during past five years and other relevant professional experience |
Number
of
Funds in the Columbia Funds complex overseen |
Other
directorships
held by Trustee during the past five years |
|
Minor
M. Shaw
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1947 |
Trustee since 6/11 for RiverSource Funds and since 2003 for Nations Funds | President, Micco LLC (private investments) since 2011; President, Micco Corp. (family investment business), 1998-2011 | 119 | Director, BlueCross BlueShield of South Carolina since April 2008; Board Chair, Hollingsworth Funds since 2016; Advisory Board member, Duke Energy Corp. since October 2016; Chair of the Duke Endowment; Chair of Greenville – Spartanburg Airport Commission; former Trustee, BofA Funds Series Trust (11 funds), 2003-2011; former Director, Piedmont Natural Gas, 2004-2016; former Director, National Association of Corporate Directors, Carolinas Chapter, 2013-2018 |
|
Sandra
Yeager
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1964 |
Trustee since 12/17 | Retired; President and founder, Hanoverian Capital, LLC (SEC registered investment advisor firm), 2008-2016; Managing Director, DuPont Capital, 2006-2008; Managing Director, Morgan Stanley Investment Management, 2004-2006; Senior Vice President, Alliance Bernstein, 1990-2004 | 117 | Director, NAPE Education Foundation since October 2016 |
Interested trustee affiliated with Investment
Manager*
|
Name,
address, year of birth |
Position held with the Trust and length of service |
Principal
occupation(s) during the
past five years and other relevant professional experience |
Number
of
Funds in the Columbia Funds complex overseen |
Other
directorships
held by Trustee during the past five years |
|
William
F. Truscott
c/o Columbia Management Investment Advisers, LLC 225 Franklin St. Boston, MA 02110 1960 |
Trustee since 11/01 for RiverSource Funds and since 6/11 for Nations Funds; Senior Vice President since 2002 for RiverSource Funds and since 5/10 for Nations Funds | Chairman of the Board and President, Columbia Management Investment Advisers, LLC since May 2010 and February 2012, respectively; Chief Executive Officer, Global Asset Management, Ameriprise Financial, Inc. since September 2012 (previously Chief Executive Officer, U.S. Asset Management & President, Annuities, May 2010 - September 2012); Director and Chief Executive Officer, Columbia Management Investment Distributors, Inc. since May 2010 and February 2012, respectively; Chairman of the Board and Chief Executive Officer, RiverSource Distributors, Inc. since 2006; Director, Threadneedle Asset Management Holdings, SARL since 2014; President and Chief Executive Officer, Ameriprise Certificate Company, 2006 - August 2012. | 188 | Chairman of the Board, Columbia Management Investment Advisers, LLC since May 2010; Director, Columbia Management Investment Distributors, Inc. since May 2010; former Director, Ameriprise Certificate Company, 2006-January 2013 |
| * | Interested person (as defined under the 1940 Act) by reason of being an officer, director, security holder and/or employee of the Investment Manager or Ameriprise Financial. |
|
Columbia
North Carolina Intermediate Municipal Bond Fund | Annual Report 2019
|
35 |
Table of Contents
TRUSTEES AND OFFICERS
(continued)
Nations Funds refer to the Funds within the Columbia Funds
Complex that historically bore the Nations brand and includes series of Columbia Funds Series Trust. RiverSource Funds refer to the Funds within the Columbia Funds Complex that historically bore the RiverSource brand and includes series of Columbia
Funds Series Trust II.
The Statement of Additional
Information has additional information about the Fund’s Board members and is available, without charge, upon request by calling 800.345.6611, visiting columbiathreadneedleus.com/investor/ or contacting your financial intermediary.
| 36 | Columbia North Carolina Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
TRUSTEES AND OFFICERS
(continued)
The Board has appointed officers who are responsible for
day-to-day business decisions based on policies it has established. The officers serve at the pleasure of the Board. The following table provides basic information about the Officers of the Fund as of the printing of this report, including principal
occupations during the past five years, although their specific titles may have varied over the period. In addition to Mr. Truscott, who is Senior Vice President, the Fund’s other officers are:
Fund officers
|
Name,
address and year of birth |
Position
and year
first appointed to position for any Fund in the Columbia Funds complex or a predecessor thereof |
Principal occupation(s) during past five years |
|
Christopher
O. Petersen
5228 Ameriprise Financial Center Minneapolis, MN 55474 Born 1970 |
President and Principal Executive Officer (2015) | Vice President and Lead Chief Counsel, Ameriprise Financial, Inc. since January 2015 (previously Vice President and Chief Counsel, January 2010 - December 2014; officer of Columbia Funds and affiliated funds since 2007. |
|
Michael
G. Clarke
225 Franklin Street Boston, MA 02110 Born 1969 |
Chief Financial Officer (Principal Financial Officer) (2009) and Senior Vice President (2019) | Vice President, Head of North American Operations, and Co-Head of Global Operations, Columbia Management Investment Advisers, LLC, since June 2019 (previously Vice President – Accounting and Tax, May 2010 - May 2019); senior officer of Columbia Funds and affiliated funds since 2002 (previously Treasurer and Chief Accounting Officer, January 2009 - January 2019 and December 2015 - January 2019, respectively). |
|
Joseph
Beranek
5890 Ameriprise Financial Center Minneapolis, MN 55474 Born 1965 |
Treasurer and Chief Accounting Officer (Principal Accounting Officer) (2019) | Vice President — Mutual Fund Accounting and Financial Reporting, Columbia Management Investment Advisers, LLC, since December 2018 and March 2017, respectively (previously Vice President — Pricing and Corporate Actions, May 2010 - March 2017). |
|
Paul
B. Goucher
485 Lexington Avenue New York, NY 10017 Born 1968 |
Senior Vice President (2011) and Assistant Secretary (2008) | Senior Vice President and Assistant General Counsel, Ameriprise Financial, Inc. since January 2017 (previously Vice President and Lead Chief Counsel, November 2008 - January 2017 and January 2013 - January 2017, respectively); Vice President, Chief Legal Officer and Assistant Secretary, Columbia Management Investment Advisers, LLC since March 2015 (previously Vice President and Assistant Secretary, May 2010 – March 2015). |
|
Thomas
P. McGuire
225 Franklin Street Boston, MA 02110 Born 1972 |
Senior Vice President and Chief Compliance Officer (2012) | Vice President — Asset Management Compliance, Ameriprise Financial, Inc., since May 2010; Chief Compliance Officer, Ameriprise Certificate Company since September 2010. |
|
Colin
Moore
225 Franklin Street Boston, MA 02110 Born 1958 |
Senior Vice President (2010) | Executive Vice President and Global Chief Investment Officer, Ameriprise Financial, Inc., since July 2013; Executive Vice President and Global Chief Investment Officer, Columbia Management Investment Advisers, LLC since July 2013. |
|
Ryan
C. Larrenaga
225 Franklin Street Boston, MA 02110 Born 1970 |
Senior Vice President (2017), Chief Legal Officer (2017), and Secretary (2015) | Vice President and Chief Counsel, Ameriprise Financial, Inc. since August 2018 (previously Vice President and Group Counsel, August 2011 - August 2018); officer of Columbia Funds and affiliated funds since 2005. |
|
Michael
E. DeFao
225 Franklin Street Boston, MA 02110 Born 1968 |
Vice President (2011) and Assistant Secretary (2010) | Vice President and Chief Counsel, Ameriprise Financial, Inc. since May 2010. |
|
Lyn
Kephart-Strong
5228 Ameriprise Financial Center Minneapolis, MN 55474 Born 1960 |
Vice President (2015) | President, Columbia Management Investment Services Corp. since October 2014; Vice President & Resolution Officer, Ameriprise Trust Company since August 2009. |
|
Columbia
North Carolina Intermediate Municipal Bond Fund | Annual Report 2019
|
37 |
Table of Contents
Additional information
The
Fund mails one shareholder report to each shareholder address, unless such shareholder elected to receive shareholder reports from the Fund electronically. If you would like more than one report, please call shareholder services at 800.345.6611 and
additional reports will be sent to you.
Proxy voting
policies and procedures
The policy of the Board of
Trustees is to vote the proxies of the companies in which the Fund holds investments consistent with the procedures as stated in the Statement of Additional Information (SAI). You may obtain a copy of the SAI without charge by calling 800.345.6611;
contacting your financial intermediary; visiting columbiathreadneedleus.com/investor/; or searching the website of the Securities and Exchange Commission (SEC) at sec.gov. Information regarding how the Fund voted proxies relating to portfolio
securities is filed with the SEC by August 31st for the most recent 12-month period ending June 30th of that year, and is available without charge by visiting columbiathreadneedleus.com/investor/, or searching the website of the SEC at
sec.gov.
Quarterly schedule of investments
The Fund files a complete schedule of portfolio holdings
with the SEC for the first and third quarters of each fiscal year on Form N-Q or Form N-PORT (available for filings after March 31, 2019). The Fund’s Form N-Q or Form N-PORT is available on the SEC’s website at sec.gov. The Fund’s
complete schedule of portfolio holdings, as filed on Form N-Q or Form N-PORT, can also be obtained without charge, upon request, by calling 800.345.6611.
Additional Fund information
For more information about the Fund, please visit
columbiathreadneedleus.com/investor/ or call 800.345.6611. Customer Service Representatives are available to answer your questions Monday through Friday from 8 a.m. to 7 p.m. Eastern time.
Fund investment manager
Columbia Management Investment Advisers, LLC
225 Franklin Street
Boston, MA 02110
Fund distributor
Columbia Management Investment Distributors, Inc.
225 Franklin Street
Boston, MA 02110
Fund transfer agent
Columbia Management Investment Services Corp.
P.O. Box 219104
Kansas City, MO 64121-9104
| 38 | Columbia North Carolina Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
[THIS PAGE INTENTIONALLY LEFT BLANK]
Table of Contents
Columbia North Carolina Intermediate Municipal Bond Fund
P.O. Box 219104
Kansas City, MO 64121-9104
Please read and consider the investment objectives, risks,
charges and expenses for any fund carefully before investing. For a prospectus and summary prospectus, which contains this and other important information about the Fund, go to
columbiathreadneedleus.com/investor/ . The Fund is distributed by Columbia Management Investment Distributors, Inc., member FINRA, and managed by Columbia Management Investment Advisers, LLC.
columbiathreadneedleus.com/investor/ . The Fund is distributed by Columbia Management Investment Distributors, Inc., member FINRA, and managed by Columbia Management Investment Advisers, LLC.
Columbia Threadneedle Investments (Columbia Threadneedle) is
the global brand name of the Columbia and Threadneedle group of companies. All rights reserved.
© 2019 Columbia Management Investment Advisers, LLC.
columbiathreadneedleus.com/investor/
ANN206_04_J01_(06/19)
Table of Contents
Annual
Report
April 30, 2019
April 30, 2019
Columbia Maryland Intermediate Municipal Bond
Fund
(formerly Columbia AMT-Free Maryland
Intermediate Muni Bond Fund)
Beginning on January 1, 2021, as permitted by regulations
adopted by the Securities and Exchange Commission, paper copies of the Fund’s annual and semiannual shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the
reports will be made available on the Fund’s website (columbiathreadneedleus.com/investor/), and each time a report is posted you will be notified by mail and provided with a website address to access the report.
If you have already elected to receive shareholder reports
electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically at any time by contacting your financial intermediary (such
as a broker-dealer or bank) or, for Fund shares held directly with the Fund, by calling 800.345.6611 or by enrolling in “eDelivery” by logging into your account at columbiathreadneedleus.com/investor/.
You may elect to receive all future reports in paper free of
charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue receiving paper copies of your shareholder reports. If you invest directly with the Fund, you can call 800.345.6611 to
let the Fund know you wish to continue receiving paper copies of your shareholder reports. Your election to receive paper reports will apply to all Columbia Funds held in your account if you invest through a financial intermediary or all Columbia
Funds held with the fund complex if you invest directly with the Fund.
Not FDIC Insured • No bank guarantee • May lose
value
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Columbia Maryland Intermediate Municipal Bond
Fund | Annual Report 2019
Table of Contents
Fund at a Glance
Investment objective
Columbia Maryland Intermediate
Municipal Bond Fund (the Fund) seeks current income exempt from U.S. federal income tax and Maryland individual income tax, consistent with moderate fluctuation of principal.
Portfolio
management
Paul Fuchs,
CFA
Lead
Portfolio Manager
Managed Fund
since 2016
Anders Myhran,
CFA
Portfolio
Manager
Managed Fund
since May 2019
Deborah
Vargo
Portfolio
Manager
Managed Fund
since 2017
Returns for Class A shares are shown
with and without the maximum initial sales charge of 3.00%. Returns for Class C shares are shown with and without the 1.00% contingent deferred sales charge for the first year only. The Fund’s other share classes are not subject to sales
charges and have limited eligibility. Please see the Fund’s prospectus for details. Performance for different share classes will vary based on differences in sales charges and fees associated with each share class. All results shown assume
reinvestment of distributions during the period. Returns do not reflect the deduction of taxes that a shareholder may pay on Fund distributions or on the redemption of Fund shares. Performance results reflect the effect of any fee waivers or
reimbursements of Fund expenses by Columbia Management Investment Advisers, LLC and/or any of its affiliates. Absent these fee waivers or expense reimbursement arrangements, performance results would have been lower.
The performance information shown represents past performance and
is not a guarantee of future results. The investment return and principal value of your investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than
the performance information shown. You may obtain performance information current to the most recent month-end by contacting your financial intermediary, visiting columbiathreadneedleus.com/investor/ or calling 800.345.6611.
| * | The returns shown for periods prior to the share class inception date (including returns for the Life of the Fund, if shown, which are since Fund inception) include the returns of the Fund’s oldest share class. These returns are adjusted to reflect any higher class-related operating expenses of the newer share classes, as applicable. Please visit columbiathreadneedleus.com/investor/investment-products /mutual-funds/appended-performance for more information. |
The Bloomberg Barclays 3–15 Year Blend Municipal Bond
Index is an unmanaged index that tracks the performance of municipal bonds issued after December 31, 1990, with remaining maturities between 2 and 17 years and at least $7 million in principal amount outstanding.
Indices are not available for investment, are not
professionally managed and do not reflect sales charges, fees, brokerage commissions, taxes or other expenses of investing. Securities in the Fund may not match those in an index.
|
Columbia
Maryland Intermediate Municipal Bond Fund | Annual Report 2019
|
3 |
Table of Contents
Fund at a Glance
(continued)
Performance of a
hypothetical $10,000 investment (April 30, 2009 — April 30, 2019)
The chart above shows the
change in value of a hypothetical $10,000 investment in Class A shares of Columbia Maryland Intermediate Municipal Bond Fund during the stated time period, and does not reflect the deduction of taxes that a shareholder may pay on Fund distributions
or on the redemption of Fund shares.
| Quality breakdown (%) (at April 30, 2019) | |
| AAA rating | 9.0 |
| AA rating | 33.9 |
| A rating | 34.5 |
| BBB rating | 19.8 |
| BB rating | 1.7 |
| Not rated | 1.1 |
| Total | 100.0 |
Percentages indicated are based
upon total fixed income investments.
Bond ratings apply
to the underlying holdings of the Fund and not the Fund itself and are divided into categories ranging from highest to lowest credit quality, determined by using the middle rating of Moody’s, S&P and Fitch, after dropping the highest and
lowest available ratings. When ratings are available from only two rating agencies, the lower rating is used. When a rating is available from only one rating agency, that rating is used. When a bond is not rated by any rating agency, it is
designated as “Not rated.” Credit quality ratings assigned by a rating agency are subjective opinions, not statements of fact, and are subject to change, including daily. The ratings assigned by credit rating agencies are but one of the
considerations that the Investment Manager and/or Fund’s subadviser incorporates into its credit analysis process, along with such other issuer-specific factors as cash flows, capital structure and leverage ratios, ability to de-leverage
(repay) through free cash flow, quality of management, market positioning and access to capital, as well as such security-specific factors as the terms of the security (e.g., interest rate and time to maturity) and the amount and type of any
collateral.
| 4 | Columbia Maryland Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Manager Discussion of Fund Performance
For
the 12-month period that ended April 30, 2019, the Fund’s Class A shares returned 4.42% excluding sales charges, and its Institutional shares returned 4.58%. The Fund’s benchmark, the Bloomberg Barclays 3-15 Year Blend Municipal Bond
Index, returned 5.91% for the same time period. Maryland municipals underperformed the national benchmark, largely as a result of their above-average credit quality.
Market overview
Municipal bonds generated healthy gains in the 12-month
reporting period, with the bulk of the rally occurring from November 2018 onward. Municipals performed reasonably well from May through August on the strength of falling U.S. Treasury yields and the combination of strong investor demand and reduced
new-issue supply in the tax-exempt market. Conditions became less favorable in September 2018, when U.S. Treasury yields climbed on indications of continued strength in the U.S. economy and fears about inflation pressures that could result from a
trade war with China. The negative trend persisted in October, as yields continued to rise on concerns that the U.S. Federal Reserve (Fed) would take a more aggressive approach to raising interest rates in 2019 than investors had been
expecting.
Sentiment again shifted abruptly in early
November, causing yields to fall sharply through the end of 2018. The fixed-income markets rallied significantly due to signs of slowing global growth, volatility in the higher-risk assets, and expectations that the Fed would in fact adopt a more
accommodative stance. In addition, various geopolitical factors, including uncertainty surrounding the U.S.-China trade dispute, Brexit negotiations, and the U.S. government shutdown, fueled a “flight to quality” into bonds. Municipals
rallied as a result, helping the major national indexes finish 2018 in positive territory.
The rally continued into the New Year, leading to the largest
first-quarter gain for the tax-exempt market since 2014. The first quarter of 2019 was also the sixth-best for municipals in the past 30 years. During this time, bonds were well supported by the backdrop of slow global growth and the increasingly
accommodative policies of the world’s major central banks. Supply-and-demand factors also remained highly favorable. Municipals rallied further in April, helping them to post a solid gain for the full 12 months.
Longer term bonds outpaced shorter term issues in the period,
mirroring trends in the Treasury market, while lower quality bonds strongly outperformed their higher rated counterparts. The “risk-on” environment of January to April led to robust investor demand for higher risk assets, lifting the
returns of higher yielding bonds in all fixed-income categories.
Maryland continued to experience slow growth
Maryland’s intermediate municipal market lagged the
broader U.S. indexes in the period. Maryland’s market was of a much higher quality level than the nation as a whole, with a weighting in AAA bonds that is four times the national benchmark. This translated to both a smaller contribution from
yield and less ability to benefit from the outperformance of lower rated bonds.
Despite this performance shortfall, the state’s economic
fundamentals remained robust. Maryland has a highly educated workforce with incomes above the U.S. average. Most of the state’s general revenues were generated from individual income taxes, and the state’s financial position was adequate
at the end of the 2018 fiscal year. Although estimated revenue for the 2019 fiscal year was revised downward in March, it is still projected to grow by 3.2% over the previous year. On the negative side, Maryland’s debt and pension liabilities
were above-average compared to other states. The state’s concentration in non-defense federal employment, while historically acting as a stabilizing factor, has led to economic volatility more recently.
Contributors and detractors
The Fund benefitted from its position in the bonds of the
Metropolitan Area Transportation Authority. We added to the portfolio’s weighting in this issuer in late November, just as the market began the rally that would continue through the end of the period. Maryland general obligations with 4%
coupons were another top performer as lower coupon, higher duration bonds outperformed. (Duration is a measure of interest-rate sensitivity.)
The Fund’s positioning with respect to duration
detracted from results. Portfolio duration drifted lower during the course of the period, which hurt performance in the strong rally of the second half of the period. Opportunities to buy longer dated intermediate issues were limited, but we
continued to look for investment candidates in this area.
|
Columbia
Maryland Intermediate Municipal Bond Fund | Annual Report 2019
|
5 |
Table of Contents
Manager Discussion of Fund Performance
(continued)
Fund positioning
At the close of the period, we were fairly comfortable with
the overall interest rate environment due to the combination of muted inflation, the late stage of the economic expansion, and the Fed’s signals that it intends to remain on hold through the end of 2019. In addition, ongoing geopolitical
issues, including trade negotiations with China, Brexit uncertainty, and Washington infighting, continue to put downward pressure on interest rates. With this as the backdrop, our strategy remained consistent during the period. We targeted a roughly
neutral duration with more emphasis on the longer part of the intermediate yield curve. The average maturity of the bonds we added to the portfolio was about 18 years, while the average maturity of those we sold was approximately seven years. The
goal of this shift was to reduce the potential effects of having a duration below that of the benchmark. The Fund’s quality profile continued to favor the lower rated segment of the investment-grade market, with meaningful allocations to
hospital, housing, and special property tax issues.
Fixed-income securities present
issuer
default risk. The Fund invests substantially in
municipal securities
and will be affected by tax, legislative, regulatory, demographic or political changes, as well
as changes impacting a state’s financial, economic or other conditions. A relatively small number of tax-exempt issuers may necessitate the Fund investing more heavily in a single issuer and, therefore, be more exposed to the risk of loss than
a fund that invests more broadly. The value of the Fund’s portfolio may be more volatile than a more
geographically diversified
fund.
Prepayment and extension
risk
exists because the timing of payments on a loan, bond or other investment may accelerate when interest rates fall or decelerate when interest rates rise which may reduce investment opportunities and potential returns. A rise in
interest rates
may result in a price decline of fixed-income instruments held by the Fund, negatively impacting its performance and NAV. Falling rates may result in the Fund investing in lower yielding debt
instruments, lowering the Fund’s income and yield. These risks may be heightened for longer maturity and duration securities.
Non-investment-grade
(high-yield or junk) securities present greater price
volatility and more risk to principal and income than higher rated securities.
Market
risk may affect a single issuer, sector of the economy, industry or the market as a whole. Federal and state
tax
rules apply to capital gain distributions and any gains or losses on sales. Income may be subject to state or local taxes.
Liquidity
risk is associated with the difficulty
of selling underlying investments at a desirable time or price. See the Fund’s prospectus for more information on these and other risks.
The views expressed in this report reflect the current views of
the respective parties. These views are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict, so actual outcomes and results may differ significantly from the views expressed.
These views are subject to change at any time based upon economic, market or other conditions and the respective parties disclaim any responsibility to update such views. These views may not be relied on as investment advice and, because investment
decisions for a Columbia fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any particular Columbia fund. References to specific securities should not be construed as a recommendation or
investment advice.
| 6 | Columbia Maryland Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Understanding Your Fund’s Expenses
(Unaudited)
(Unaudited)
As an investor, you incur two types of costs. There are
shareholder transaction costs, which generally include sales charges on purchases and may include redemption fees. There are also ongoing fund costs, which generally include management fees, distribution and/or service fees, and other fund expenses.
The following information is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to help you compare these costs with the ongoing costs of investing in other mutual funds.
Analyzing your Fund’s expenses
To illustrate these ongoing costs, we have provided examples
and calculated the expenses paid by investors in each share class of the Fund during the period. The actual and hypothetical information in the table is based on an initial investment of $1,000 at the beginning of the period indicated and held for
the entire period. Expense information is calculated two ways and each method provides you with different information. The amount listed in the “Actual” column is calculated using the Fund’s actual operating expenses and total
return for the period. You may use the Actual information, together with the amount invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000
= 8.6), then multiply the results by the expenses paid during the period under the “Actual” column. The amount listed in the “Hypothetical” column assumes a 5% annual rate of return before expenses (which is not the
Fund’s actual return) and then applies the Fund’s actual expense ratio for the period to the hypothetical return. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end
of the period or the expenses you paid during the period. See “Compare with other funds” below for details on how to use the hypothetical data.
Compare with other funds
Since all mutual funds are required to include the same
hypothetical calculations about expenses in shareholder reports, you can use this information to compare the ongoing cost of investing in the Fund with other funds. To do so, compare the hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of other funds. As you compare hypothetical examples of other funds, it is important to note that hypothetical examples are meant to highlight the ongoing costs of investing in a fund only and do not reflect any
transaction costs, such as sales charges, or redemption or exchange fees. Therefore, the hypothetical calculations are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. If
transaction costs were included in these calculations, your costs would be higher.
Expenses paid during the period
are equal to the annualized expense ratio for each class as indicated above, multiplied by the average account value over the period and then multiplied by the number of days in the Fund’s most recent fiscal half year and divided by 365.
Expenses do not include fees and expenses incurred indirectly
by the Fund from its investment in underlying funds, including affiliated and non-affiliated pooled investment vehicles, such as mutual funds and exchange-traded funds.
Had Columbia Management Investment Advisers, LLC and/or certain
of its affiliates not waived/reimbursed certain fees and expenses, account value at the end of the period would have been reduced.
|
Columbia
Maryland Intermediate Municipal Bond Fund | Annual Report 2019
|
7 |
Table of Contents
Portfolio of Investments
April 30, 2019
April 30, 2019
(Percentages represent value of investments compared to net
assets)
Investments in securities
The accompanying Notes to Financial Statements are an integral part
of this statement.
| 8 | Columbia Maryland Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Portfolio of Investments
(continued)
April 30, 2019
April 30, 2019
The accompanying Notes to Financial Statements are an integral part
of this statement.
|
Columbia
Maryland Intermediate Municipal Bond Fund | Annual Report 2019
|
9 |
Table of Contents
Portfolio of Investments
(continued)
April 30, 2019
April 30, 2019
| Money Market Funds 0.6% | ||
| Shares | Value ($) | |
| Dreyfus Tax-Exempt Cash Management Fund, Institutional Shares, 1.981% (a) | 302,344 | 302,344 |
|
Total
Money Market Funds
(Cost $302,344) |
302,344 | |
|
Total
Investments in Securities
(Cost: $46,700,368) |
48,714,055 | |
| Other Assets & Liabilities, Net | 574,809 | |
| Net Assets | 49,288,864 | |
Notes to Portfolio of Investments
| (a) | The rate shown is the seven-day current annualized yield at April 30, 2019. |
Abbreviation Legend
| AGM | Assured Guaranty Municipal Corporation |
| FGIC | Financial Guaranty Insurance Corporation |
Fair value measurements
The Fund categorizes its fair value measurements
according to a three-level hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs by prioritizing that the most observable input be used when available. Observable inputs are those that market participants
would use in pricing an investment based on market data obtained from sources independent of the reporting entity. Unobservable inputs are those that reflect the Fund’s assumptions about the information market participants would use in pricing
an investment. An investment’s level within the fair value hierarchy is based on the lowest level of any input that is deemed significant to the asset’s or liability’s fair value measurement. The input levels are not necessarily an
indication of the risk or liquidity associated with investments at that level. For example, certain U.S. government securities are generally high quality and liquid, however, they are reflected as Level 2 because the inputs used to determine fair
value may not always be quoted prices in an active market.
Fair value inputs are summarized in the three broad
levels listed below:
The accompanying Notes to Financial Statements are an integral part of this
statement.
| 10 | Columbia Maryland Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Portfolio of Investments
(continued)
April 30, 2019
April 30, 2019
Fair value
measurements
(continued)
| ■ | Level 1 — Valuations based on quoted prices for investments in active markets that the Fund has the ability to access at the measurement date. Valuation adjustments are not applied to Level 1 investments. |
| ■ | Level 2 — Valuations based on other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risks, etc.). |
| ■ | Level 3 — Valuations based on significant unobservable inputs (including the Fund’s own assumptions and judgment in determining the fair value of investments). |
Inputs that are used in determining fair value of an investment
may include price information, credit data, volatility statistics, and other factors. These inputs can be either observable or unobservable. The availability of observable inputs can vary between investments, and is affected by various factors such
as the type of investment, and the volume and level of activity for that investment or similar investments in the marketplace. The inputs will be considered by the Investment Manager, along with any other relevant factors in the calculation of an
investment’s fair value. The Fund uses prices and inputs that are current as of the measurement date, which may include periods of market dislocations. During these periods, the availability of prices and inputs may be reduced for many
investments. This condition could cause an investment to be reclassified between the various levels within the hierarchy.
Investments falling into the Level 3 category are primarily
supported by quoted prices from brokers and dealers participating in the market for those investments. However, these may be classified as Level 3 investments due to lack of market transparency and corroboration to support these quoted prices.
Additionally, valuation models may be used as the pricing source for any remaining investments classified as Level 3. These models may rely on one or more significant unobservable inputs and/or significant assumptions by the Investment Manager.
Inputs used in valuations may include, but are not limited to, financial statement analysis, capital account balances, discount rates and estimated cash flows, and comparable company data.
Under the direction of the Fund’s Board of Trustees (the
Board), the Investment Manager’s Valuation Committee (the Committee) is responsible for overseeing the valuation procedures approved by the Board. The Committee consists of voting and non-voting members from various groups within the
Investment Manager’s organization, including operations and accounting, trading and investments, compliance, risk management and legal.
The Committee meets at least monthly to review and approve
valuation matters, which may include a description of specific valuation determinations, data regarding pricing information received from approved pricing vendors and brokers and the results of Board-approved valuation control policies and
procedures (the Policies). The Policies address, among other things, instances when market quotations are or are not readily available, including recommendations of third party pricing vendors and a determination of appropriate pricing
methodologies; events that require specific valuation determinations and assessment of fair value techniques; securities with a potential for stale pricing, including those that are illiquid, restricted, or in default; and the effectiveness of third
party pricing vendors, including periodic reviews of vendors. The Committee meets more frequently, as needed, to discuss additional valuation matters, which may include the need to review back-testing results, review time-sensitive information or
approve related valuation actions. The Committee reports to the Board, with members of the Committee meeting with the Board at each of its regularly scheduled meetings to discuss valuation matters and actions during the period, similar to those
described earlier.
For investments categorized as Level 3,
the Committee monitors information similar to that described above, which may include: (i) data specific to the issuer or comparable issuers, (ii) general market or specific sector news and (iii) quoted prices and specific or similar security
transactions. The Committee considers this data and any changes from prior periods in order to assess the reasonableness of observable and unobservable inputs, any assumptions or internal models used to value those securities and changes in fair
value. This data is also used to corroborate, when available, information received from approved pricing vendors and brokers. Various factors impact the frequency of monitoring this information (which may occur as often as daily). However, the
Committee may determine that changes to inputs, assumptions and models are not required as a result of the monitoring procedures performed.
The following table is a summary of the inputs used to value the
Fund’s investments at April 30, 2019:
|
Level
1
quoted prices in active markets for identical assets ($) |
Level
2
other significant observable inputs ($) |
Level
3
significant unobservable inputs ($) |
Total ($) | |
| Investments in Securities | ||||
| Municipal Bonds | — | 48,411,711 | — | 48,411,711 |
| Money Market Funds | 302,344 | — | — | 302,344 |
| Total Investments in Securities | 302,344 | 48,411,711 | — | 48,714,055 |
See the Portfolio of Investments for
all investment classifications not indicated in the table.
The Fund’s assets assigned to the Level 2 input category
are generally valued using the market approach, in which a security’s value is determined through reference to prices and information from market transactions for similar or identical assets.
There were no transfers of financial assets between levels
during the period.
The accompanying Notes to Financial Statements are an integral part of this
statement.
|
Columbia
Maryland Intermediate Municipal Bond Fund | Annual Report 2019
|
11 |
Table of Contents
Statement of Assets and Liabilities
April 30, 2019
April 30, 2019
| Assets | |
| Investments in securities, at value | |
| Unaffiliated issuers (cost $46,700,368) | $48,714,055 |
| Cash | 85,032 |
| Receivable for: | |
| Capital shares sold | 46,199 |
| Interest | 737,000 |
| Expense reimbursement due from Investment Manager | 234 |
| Prepaid expenses | 543 |
| Total assets | 49,583,063 |
| Liabilities | |
| Payable for: | |
| Capital shares purchased | 26,522 |
| Distributions to shareholders | 118,409 |
| Management services fees | 633 |
| Distribution and/or service fees | 124 |
| Transfer agent fees | 2,141 |
| Compensation of board members | 107,708 |
| Audit fees | 36,295 |
| Other expenses | 2,367 |
| Total liabilities | 294,199 |
| Net assets applicable to outstanding capital stock | $49,288,864 |
| Represented by | |
| Paid in capital | 47,132,379 |
| Total distributable earnings (loss) (Note 2) | 2,156,485 |
| Total - representing net assets applicable to outstanding capital stock | $49,288,864 |
| Class A | |
| Net assets | $11,975,636 |
| Shares outstanding | 1,144,209 |
| Net asset value per share | $10.47 |
| Maximum sales charge | 3.00% |
| Maximum offering price per share (calculated by dividing the net asset value per share by 1.0 minus the maximum sales charge for Class A shares) | $10.79 |
| Advisor Class | |
| Net assets | $741,047 |
| Shares outstanding | 70,770 |
| Net asset value per share | $10.47 |
| Class C | |
| Net assets | $1,540,397 |
| Shares outstanding | 147,118 |
| Net asset value per share | $10.47 |
| Institutional Class | |
| Net assets | $7,590,663 |
| Shares outstanding | 725,416 |
| Net asset value per share | $10.46 |
| Institutional 3 Class | |
| Net assets | $27,441,121 |
| Shares outstanding | 2,613,500 |
| Net asset value per share | $10.50 |
The accompanying Notes to Financial Statements are an integral part of this
statement.
| 12 | Columbia Maryland Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Statement of Operations
Year Ended April 30, 2019
Year Ended April 30, 2019
| Net investment income | |
| Income: | |
| Dividends — unaffiliated issuers | $2,344 |
| Interest | 1,939,947 |
| Total income | 1,942,291 |
| Expenses: | |
| Management services fees | 264,165 |
| Distribution and/or service fees | |
| Class A | 32,411 |
| Class C | 18,569 |
| Transfer agent fees | |
| Class A | 13,513 |
| Advisor Class | 591 |
| Class C | 1,937 |
| Institutional Class | 7,456 |
| Institutional 3 Class | 2,510 |
| Compensation of board members | 14,469 |
| Custodian fees | 1,376 |
| Printing and postage fees | 9,654 |
| Registration fees | 9,927 |
| Audit fees | 33,900 |
| Legal fees | 7,353 |
| Interest on interfund lending | 188 |
| Compensation of chief compliance officer | 13 |
| Other | 9,206 |
| Total expenses | 427,238 |
| Fees waived or expenses reimbursed by Investment Manager and its affiliates | (103,329) |
| Fees waived by transfer agent | |
| Institutional 3 Class | (1,583) |
| Expense reduction | (20) |
| Total net expenses | 322,306 |
| Net investment income | 1,619,985 |
| Realized and unrealized gain (loss) — net | |
| Net realized gain (loss) on: | |
| Investments — unaffiliated issuers | (80,673) |
| Net realized loss | (80,673) |
| Net change in unrealized appreciation (depreciation) on: | |
| Investments — unaffiliated issuers | 853,131 |
| Net change in unrealized appreciation (depreciation) | 853,131 |
| Net realized and unrealized gain | 772,458 |
| Net increase in net assets resulting from operations | $2,392,443 |
The accompanying Notes to Financial Statements are an
integral part of this statement.
|
Columbia
Maryland Intermediate Municipal Bond Fund | Annual Report 2019
|
13 |
Table of Contents
Statement of Changes in Net Assets
|
Year
Ended
April 30, 2019 |
Year
Ended
April 30, 2018 |
|
| Operations | ||
| Net investment income | $1,619,985 | $1,918,407 |
| Net realized gain (loss) | (80,673) | 655,064 |
| Net change in unrealized appreciation (depreciation) | 853,131 | (1,815,996) |
| Net increase in net assets resulting from operations | 2,392,443 | 757,475 |
| Distributions to shareholders | ||
| Net investment income and net realized gains | ||
| Class A | (424,672) | |
| Advisor Class | (20,573) | |
| Class C | (45,672) | |
| Institutional Class | (253,653) | |
| Institutional 3 Class | (1,205,166) | |
| Net investment income | ||
| Class A | (370,117) | |
| Advisor Class | (6,742) | |
| Class B | (48) | |
| Class C | (49,028) | |
| Institutional Class | (625,161) | |
| Institutional 3 Class | (855,839) | |
| Net realized gains | ||
| Class A | (68,715) | |
| Advisor Class | (1,463) | |
| Class C | (12,828) | |
| Institutional Class | (37,642) | |
| Institutional 3 Class | (203,316) | |
| Total distributions to shareholders (Note 2) | (1,949,736) | (2,230,899) |
| Decrease in net assets from capital stock activity | (13,683,248) | (11,738,743) |
| Total decrease in net assets | (13,240,541) | (13,212,167) |
| Net assets at beginning of year | 62,529,405 | 75,741,572 |
| Net assets at end of year | $49,288,864 | $62,529,405 |
| Undistributed net investment income | $223,471 | $238,451 |
The accompanying Notes to Financial Statements are an
integral part of this statement.
| 14 | Columbia Maryland Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Statement of Changes in Net Assets
(continued)
| Year Ended | Year Ended | |||
| April 30, 2019 | April 30, 2018 | |||
| Shares | Dollars ($) | Shares | Dollars ($) | |
| Capital stock activity | ||||
| Class A | ||||
| Subscriptions | 149,568 | 1,546,307 | 85,503 | 907,957 |
| Distributions reinvested | 19,602 | 202,774 | 17,445 | 184,585 |
| Redemptions | (327,638) | (3,399,000) | (226,319) | (2,401,454) |
| Net decrease | (158,468) | (1,649,919) | (123,371) | (1,308,912) |
| Advisor Class | ||||
| Subscriptions | 44,498 | 461,529 | 27,261 | 290,484 |
| Distributions reinvested | 1,955 | 20,231 | 746 | 7,880 |
| Redemptions | (2,170) | (22,644) | (9,587) | (99,919) |
| Net increase | 44,283 | 459,116 | 18,420 | 198,445 |
| Class B | ||||
| Redemptions | — | — | (932) | (10,068) |
| Net decrease | — | — | (932) | (10,068) |
| Class C | ||||
| Subscriptions | 30,814 | 318,902 | 17,933 | 189,029 |
| Distributions reinvested | 3,620 | 37,439 | 4,449 | 47,094 |
| Redemptions | (128,253) | (1,332,227) | (46,116) | (486,467) |
| Net decrease | (93,819) | (975,886) | (23,734) | (250,344) |
| Institutional Class | ||||
| Subscriptions | 259,897 | 2,687,032 | 128,919 | 1,369,506 |
| Distributions reinvested | 19,867 | 205,464 | 19,642 | 207,942 |
| Redemptions | (244,492) | (2,527,902) | (4,898,845) | (52,510,963) |
| Net increase (decrease) | 35,272 | 364,594 | (4,750,284) | (50,933,515) |
| Institutional 3 Class | ||||
| Subscriptions | 747,049 | 7,772,372 | 4,509,797 | 48,484,322 |
| Distributions reinvested | 1,104 | 11,449 | 621 | 6,549 |
| Redemptions | (1,898,700) | (19,664,974) | (747,319) | (7,925,220) |
| Net increase (decrease) | (1,150,547) | (11,881,153) | 3,763,099 | 40,565,651 |
| Total net decrease | (1,323,279) | (13,683,248) | (1,116,802) | (11,738,743) |
The accompanying Notes to Financial Statements are an integral part of this
statement.
|
Columbia
Maryland Intermediate Municipal Bond Fund | Annual Report 2019
|
15 |
Table of Contents
Financial Highlights
The
following table is intended to help you understand the Fund’s financial performance. Certain information reflects financial results for a single share of a class held for the periods shown. Per share net investment income (loss) amounts are
calculated based on average shares outstanding during the period. Total return assumes reinvestment of all dividends and distributions, if any. Total return does not reflect payment of sales charges, if any. Total return and portfolio turnover are
not annualized for periods of less than one year. The portfolio turnover rate is calculated without regard to purchase and sales transactions of short-term instruments and certain derivatives, if any. If such transactions were included, the
Fund’s portfolio turnover rate may be higher.
|
Net
asset value,
beginning of period |
Net
investment income |
Net
realized and unrealized gain (loss) |
Total
from
investment operations |
Distributions
from net investment income |
Distributions
from net realized gains |
Total
distributions to shareholders |
|
| Class A | |||||||
| Year Ended 4/30/2019 | $10.36 | 0.28 | 0.17 | 0.45 | (0.28) | (0.06) | (0.34) |
| Year Ended 4/30/2018 | $10.61 | 0.27 | (0.20) | 0.07 | (0.27) | (0.05) | (0.32) |
| Year Ended 4/30/2017 | $10.90 | 0.27 | (0.29) | (0.02) | (0.27) | — | (0.27) |
| Year Ended 4/30/2016 | $10.81 | 0.29 | 0.09 | 0.38 | (0.29) | — | (0.29) |
| Year Ended 4/30/2015 | $10.80 | 0.31 | 0.01 | 0.32 | (0.31) | — | (0.31) |
| Advisor Class | |||||||
| Year Ended 4/30/2019 | $10.36 | 0.30 | 0.18 | 0.48 | (0.31) | (0.06) | (0.37) |
| Year Ended 4/30/2018 | $10.61 | 0.30 | (0.20) | 0.10 | (0.30) | (0.05) | (0.35) |
| Year Ended 4/30/2017 | $10.90 | 0.30 | (0.29) | 0.01 | (0.30) | — | (0.30) |
| Year Ended 4/30/2016 | $10.81 | 0.32 | 0.09 | 0.41 | (0.32) | — | (0.32) |
| Year Ended 4/30/2015 | $10.80 | 0.34 | 0.01 | 0.35 | (0.34) | — | (0.34) |
| Class C | |||||||
| Year Ended 4/30/2019 | $10.36 | 0.20 | 0.17 | 0.37 | (0.20) | (0.06) | (0.26) |
| Year Ended 4/30/2018 | $10.61 | 0.19 | (0.20) | (0.01) | (0.19) | (0.05) | (0.24) |
| Year Ended 4/30/2017 | $10.90 | 0.19 | (0.29) | (0.10) | (0.19) | — | (0.19) |
| Year Ended 4/30/2016 | $10.81 | 0.21 | 0.09 | 0.30 | (0.21) | — | (0.21) |
| Year Ended 4/30/2015 | $10.80 | 0.23 | 0.01 | 0.24 | (0.23) | — | (0.23) |
| Institutional Class | |||||||
| Year Ended 4/30/2019 | $10.36 | 0.30 | 0.16 | 0.46 | (0.30) | (0.06) | (0.36) |
| Year Ended 4/30/2018 | $10.61 | 0.30 | (0.20) | 0.10 | (0.30) | (0.05) | (0.35) |
| Year Ended 4/30/2017 | $10.90 | 0.29 | (0.28) | 0.01 | (0.30) | — | (0.30) |
| Year Ended 4/30/2016 | $10.81 | 0.32 | 0.09 | 0.41 | (0.32) | — | (0.32) |
| Year Ended 4/30/2015 | $10.80 | 0.34 | 0.01 | 0.35 | (0.34) | — | (0.34) |
| Institutional 3 Class | |||||||
| Year Ended 4/30/2019 | $10.39 | 0.31 | 0.18 | 0.49 | (0.32) | (0.06) | (0.38) |
| Year Ended 4/30/2018 | $10.64 | 0.31 | (0.20) | 0.11 | (0.31) | (0.05) | (0.36) |
| Year Ended 4/30/2017 (e) | $10.55 | 0.05 | 0.09 (f) | 0.14 | (0.05) | — | (0.05) |
| Notes to Financial Highlights | |
| (a) | In addition to the fees and expenses that the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of any other funds in which it invests. Such indirect expenses are not included in the Fund’s reported expense ratios. |
| (b) | Total net expenses include the impact of certain fee waivers/expense reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
| (c) | Ratios include interfund lending expense which is less than 0.01%. |
| (d) | The benefits derived from expense reductions had an impact of less than 0.01%. |
| (e) | Institutional 3 Class shares commenced operations on March 1, 2017. Per share data and total return reflect activity from that date. |
| (f) | Calculation of the net gain (loss) per share (both realized and unrealized) does not correlate to the aggregate realized and unrealized gain (loss) presented in the Statement of Operations due to the timing of subscriptions and redemptions of Fund shares in relation to fluctuations in the market value of the portfolio. |
| (g) | Annualized. |
The accompanying Notes to Financial Statements are an integral
part of this statement.
| 16 | Columbia Maryland Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Financial Highlights
(continued)
|
Net
asset value, end of period |
Total
return |
Total
gross
expense ratio to average net assets (a) |
Total
net
expense ratio to average net assets (a),(b) |
Net
investment
income ratio to average net assets |
Portfolio
turnover |
Net
assets, end of period (000’s) |
|
| Class A | |||||||
| Year Ended 4/30/2019 | $10.47 | 4.42% | 0.98% (c) | 0.79% (c),(d) | 2.67% | 4% | $11,976 |
| Year Ended 4/30/2018 | $10.36 | 0.65% | 0.98% | 0.79% (d) | 2.55% | 9% | $13,494 |
| Year Ended 4/30/2017 | $10.61 | (0.19%) | 1.01% | 0.81% | 2.50% | 20% | $15,125 |
| Year Ended 4/30/2016 | $10.90 | 3.60% | 1.04% | 0.81% (d) | 2.72% | 13% | $18,362 |
| Year Ended 4/30/2015 | $10.81 | 3.00% | 1.04% | 0.81% (d) | 2.87% | 10% | $20,593 |
| Advisor Class | |||||||
| Year Ended 4/30/2019 | $10.47 | 4.68% | 0.73% (c) | 0.55% (c),(d) | 2.94% | 4% | $741 |
| Year Ended 4/30/2018 | $10.36 | 0.90% | 0.72% | 0.54% (d) | 2.79% | 9% | $274 |
| Year Ended 4/30/2017 | $10.61 | 0.07% | 0.72% | 0.54% | 2.87% | 20% | $86 |
| Year Ended 4/30/2016 | $10.90 | 3.86% | 0.77% | 0.56% (d) | 2.97% | 13% | $10 |
| Year Ended 4/30/2015 | $10.81 | 3.25% | 0.78% | 0.56% (d) | 3.12% | 10% | $10 |
| Class C | |||||||
| Year Ended 4/30/2019 | $10.47 | 3.64% | 1.73% (c) | 1.54% (c),(d) | 1.91% | 4% | $1,540 |
| Year Ended 4/30/2018 | $10.36 | (0.10%) | 1.73% | 1.54% (d) | 1.80% | 9% | $2,497 |
| Year Ended 4/30/2017 | $10.61 | (0.93%) | 1.76% | 1.56% | 1.76% | 20% | $2,807 |
| Year Ended 4/30/2016 | $10.90 | 2.83% | 1.79% | 1.56% (d) | 1.97% | 13% | $2,638 |
| Year Ended 4/30/2015 | $10.81 | 2.23% | 1.79% | 1.56% (d) | 2.11% | 10% | $2,796 |
| Institutional Class | |||||||
| Year Ended 4/30/2019 | $10.46 | 4.58% | 0.73% (c) | 0.54% (c),(d) | 2.92% | 4% | $7,591 |
| Year Ended 4/30/2018 | $10.36 | 0.89% | 0.74% | 0.55% (d) | 2.76% | 9% | $7,148 |
| Year Ended 4/30/2017 | $10.61 | 0.06% | 0.76% | 0.56% | 2.75% | 20% | $57,704 |
| Year Ended 4/30/2016 | $10.90 | 3.86% | 0.79% | 0.56% (d) | 2.97% | 13% | $72,405 |
| Year Ended 4/30/2015 | $10.81 | 3.26% | 0.79% | 0.56% (d) | 3.12% | 10% | $68,033 |
| Institutional 3 Class | |||||||
| Year Ended 4/30/2019 | $10.50 | 4.78% | 0.63% (c) | 0.44% (c) | 3.01% | 4% | $27,441 |
| Year Ended 4/30/2018 | $10.39 | 1.02% | 0.62% | 0.43% | 2.93% | 9% | $39,116 |
| Year Ended 4/30/2017 (e) | $10.64 | 1.35% | 0.58% (g) | 0.42% (g) | 3.05% (g) | 20% | $10 |
The accompanying Notes to Financial Statements are an integral part of this
statement.
|
Columbia
Maryland Intermediate Municipal Bond Fund | Annual Report 2019
|
17 |
Table of Contents
Notes to Financial Statements
April 30, 2019
April 30, 2019
Note 1. Organization
Columbia Maryland Intermediate Municipal Bond Fund (formerly
known as Columbia AMT-Free Maryland Intermediate Muni Bond Fund) (the Fund), a series of Columbia Funds Series Trust (the Trust), is a non-diversified fund. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act),
as an open-end management investment company organized as a Delaware statutory trust.
Effective May 14, 2019, Columbia AMT-Free Maryland
Intermediate Muni Bond Fund was renamed Columbia Maryland Intermediate Municipal Bond Fund.
Fund shares
The Trust may issue an unlimited number of shares (without par
value). Although all share classes generally have identical voting, dividend and liquidation rights, each share class votes separately when required by the Trust’s organizational documents or by law. Different share classes pay different
distribution amounts to the extent the expenses of such share classes differ, and distributions in liquidation will be proportional to the net asset value of each share class. Each share class has its own expense and sales charge structure. The Fund
offers each of the share classes identified below.
Class
A shares are subject to a maximum front-end sales charge of 3.00% based on the initial investment amount. Class A shares purchased without an initial sales charge are subject to a contingent deferred sales charge (CDSC) of 0.75% on certain
investments of $500,000 or more if redeemed within 12 months after purchase.
Advisor Class shares are not subject to sales charges and are
generally available only to omnibus retirement plans and certain investors as described in the Fund’s prospectus.
Class C shares are subject to a 1.00% CDSC on shares redeemed
within 12 months after purchase. Effective July 1, 2018, Class C shares automatically convert to Class A shares of the same Fund in the month of or the month following the 10-year anniversary of the Class C shares purchase date.
Institutional Class shares are not subject to sales charges
and are generally available only to eligible investors, which are subject to different investment minimums as described in the Fund’s prospectus.
Institutional 3 Class shares are not subject to sales charges
and are available to institutional and certain other investors as described in the Fund’s prospectus.
Note 2. Summary of significant accounting
policies
Basis of preparation
The Fund is an investment company that applies the accounting
and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946,
Financial Services - Investment Companies
(ASC 946). The financial statements are prepared
in accordance with U.S. generally accepted accounting principles (GAAP), which requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
The following is a summary of significant accounting policies
followed by the Fund in the preparation of its financial statements.
Security valuation
Debt securities generally are valued by pricing services
approved by the Board of Trustees based upon market transactions for normal, institutional-size trading units of similar securities. The services may use various pricing techniques that take into account, as applicable, factors such as yield,
quality, coupon rate, maturity, type of issue, trading characteristics and other data, as well as approved independent broker-dealer quotes. Debt securities for which quotations are not readily available or
| 18 | Columbia Maryland Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Notes to Financial Statements
(continued)
April 30, 2019
April 30, 2019
not believed to be
reflective of market value may also be valued based upon a bid quote from an approved independent broker-dealer. Debt securities maturing in 60 days or less are valued primarily at amortized cost value, unless this method results in a valuation that
management believes does not approximate market value.
Investments for which market quotations are not readily
available, or that have quotations which management believes are not reflective of market value or reliable, are valued at fair value as determined in good faith under procedures approved by and under the general supervision of the Board of
Trustees. If a security or class of securities (such as foreign securities) is valued at fair value, such value is likely to be different from the quoted or published price for the security.
The determination of fair value often requires significant
judgment. To determine fair value, management may use assumptions including but not limited to future cash flows and estimated risk premiums. Multiple inputs from various sources may be used to determine fair value.
GAAP requires disclosure regarding the inputs and valuation
techniques used to measure fair value and any changes in valuation inputs or techniques. In addition, investments shall be disclosed by major category. This information is disclosed following the Fund’s Portfolio of Investments.
Security transactions
Security transactions are accounted for on the trade date.
Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes.
Income recognition
Interest income is recorded on an accrual basis. Market
premiums and discounts, including original issue discounts, are amortized and accreted, respectively, over the expected life of the security on all debt securities, unless otherwise noted.
The Fund may place a debt security on non-accrual status and
reduce related interest income when it becomes probable that the interest will not be collected and the amount of uncollectible interest can be reasonably estimated. A defaulted debt security is removed from non-accrual status when the issuer
resumes interest payments or when collectibility of interest is reasonably assured.
Expenses
General expenses of the Trust are allocated to the Fund and
other funds of the Trust based upon relative net assets or other expense allocation methodologies determined by the nature of the expense. Expenses directly attributable to the Fund are charged to the Fund. Expenses directly attributable to a
specific class of shares are charged to that share class.
Determination of class net asset value
All income, expenses (other than class-specific expenses,
which are charged to that share class, as shown in the Statement of Operations) and realized and unrealized gains (losses) are allocated to each class of the Fund on a daily basis, based on the relative net assets of each class, for purposes of
determining the net asset value of each class.
Federal
income tax status
The Fund intends to qualify each year
as a regulated investment company under Subchapter M of the Internal Revenue Code, as amended, and will distribute substantially all of its net tax-exempt and investment company taxable income and net capital gain, if any, for its tax year, and as
such will not be subject to federal income taxes. In addition, the Fund intends to distribute in each calendar year substantially all of its ordinary income, capital gain net income and certain other amounts, if any, such that the Fund should not be
subject to federal excise tax. Therefore, no federal income or excise tax provision is recorded.
Distributions to shareholders
Distributions from net investment income, if any, are declared
daily and paid monthly. Net realized capital gains, if any, are distributed at least annually. Income distributions and capital gain distributions are determined in accordance with federal income tax regulations, which may differ from GAAP.
|
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|
19 |
Table of Contents
Notes to Financial Statements
(continued)
April 30, 2019
April 30, 2019
Guarantees and indemnifications
Under the Trust’s organizational documents and, in some
cases, by contract, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust or its funds. In addition, certain of the Fund’s contracts with its service providers contain
general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown since the amount of any future claims that may be made against the Fund cannot be determined, and the Fund has no historical basis for predicting
the likelihood of any such claims.
Recent accounting
pronouncements
Accounting Standards Update 2017-08
Premium Amortization on Purchased Callable Debt Securities
In March 2017, the Financial Accounting Standards Board issued
Accounting Standards Update (ASU) No. 2017-08 Premium Amortization on Purchased Callable Debt Securities. ASU No. 2017-08 updates the accounting standards to shorten the amortization period for certain purchased callable debt securities, held at a
premium, to be amortized to the earliest call date. The update applies to securities with explicit, noncontingent call features that are callable at fixed prices and on preset dates. The standard is effective for annual periods beginning after
December 15, 2018 and interim periods within those fiscal years. Management does not expect the implementation of this guidance to have a material impact on the financial statement amounts and footnote disclosures.
Accounting Standards Update 2018-13 Disclosure Framework -
Changes to the Disclosure Requirements for Fair Value Measurement
In August 2018, the Financial Accounting Standards Board
issued Accounting Standards Update (ASU) No. 2018-13 Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. ASU No. 2018-13, in addition to other modifications and additions, removes the requirement to disclose the
amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy and the policy for the timing of transfers between levels. The standard is effective for annual periods beginning after December 15, 2019 and interim periods
within those fiscal years. At this time, management is evaluating the implication of this guidance and the impact it will have on the financial statement disclosures, if any.
Disclosure Update and Simplification
In September 2018, the Securities and Exchange Commission
(SEC) released Final Rule 33-10532, Disclosure Update and Simplification, which amends certain financial statement disclosure requirements that the SEC determined to be redundant, outdated, or superseded in light of other SEC disclosure
requirements, GAAP, or changes in the information environment. As a result of the amendments, management implemented disclosure changes which included removing the components of distributable earnings presented on the Statement of Assets and
Liabilities and combining income and gain distributions paid to shareholders as presented on the Statement of Changes in Net Assets. Any values presented to meet prior year requirements were left unchanged. The amendments had no effect on the
Fund’s net assets or results of operation.
Note
3. Fees and other transactions with affiliates
Management services fees
The Fund has entered into a Management Agreement with Columbia
Management Investment Advisers, LLC (the Investment Manager), a wholly-owned subsidiary of Ameriprise Financial, Inc. (Ameriprise Financial). Under the Management Agreement, the Investment Manager provides the Fund with investment research and
advice, as well as administrative and accounting services. The management services fee is an annual fee that is equal to a percentage of the Fund’s daily net assets that declines from 0.47% to 0.31% as the Fund’s net assets increase. The
effective management services fee rate for the year ended April 30, 2019 was 0.47% of the Fund’s average daily net assets.
Compensation of board members
Members of the Board of Trustees who are not officers or
employees of the Investment Manager or Ameriprise Financial are compensated for their services to the Fund as disclosed in the Statement of Operations. Under a Deferred Compensation Plan (the Deferred Plan), these members of the Board of Trustees
may elect to defer payment of up to 100% of their
| 20 | Columbia Maryland Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Notes to Financial Statements
(continued)
April 30, 2019
April 30, 2019
compensation.
Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of certain funds managed by the Investment Manager. The Fund’s liability for these amounts is adjusted for market value changes and remains in the
Fund until distributed in accordance with the Deferred Plan. All amounts payable under the Deferred Plan constitute a general unsecured obligation of the Fund.
Compensation of Chief Compliance Officer
The Board of Trustees has appointed a Chief Compliance Officer
to the Fund in accordance with federal securities regulations. As disclosed in the Statement of Operations, a portion of the Chief Compliance Officer’s total compensation is allocated to the Fund, along with other allocations to affiliated
registered investment companies managed by the Investment Manager and its affiliates, based on relative net assets.
Transfer agency fees
Under a Transfer and Dividend Disbursing Agent Agreement,
Columbia Management Investment Services Corp. (the Transfer Agent), an affiliate of the Investment Manager and a wholly-owned subsidiary of Ameriprise Financial, is responsible for providing transfer agency services to the Fund. The Transfer Agent
has contracted with DST Asset Manager Solutions, Inc. (DST) to serve as sub-transfer agent. The Transfer Agent pays the fees of DST for services as sub-transfer agent and DST is not entitled to reimbursement for such fees from the Fund (with the
exception of out-of-pocket fees).
The Fund pays the
Transfer Agent a monthly transfer agency fee based on the number or the average value of accounts, depending on the type of account. In addition, the Fund pays the Transfer Agent a fee for shareholder services based on the number of accounts or on a
percentage of the average aggregate value of the Fund’s shares maintained in omnibus accounts up to the lesser of the amount charged by the financial intermediary or a cap established by the Board of Trustees from time to time.
The Transfer Agent also receives compensation from the Fund
for various shareholder services and reimbursements for certain out-of-pocket fees. Total transfer agency fees for Institutional 3 Class shares are subject to an annual limitation of not more than 0.02% of the average daily net assets attributable
to Institutional 3 Class shares. In addition, effective September 1, 2018 through August 31, 2019, Institutional 3 Class shares are subject to a contractual transfer agency fee annual limitation of not more than 0.00% of the average daily net assets
attributable to Institutional 3 Class shares.
For the
year ended April 30, 2019, the Fund’s effective transfer agency fee rates as a percentage of average daily net assets of each class were as follows:
| Effective rate (%) | |
| Class A | 0.10 |
| Advisor Class | 0.10 |
| Class C | 0.10 |
| Institutional Class | 0.10 |
| Institutional 3 Class | 0.00 |
An annual minimum account balance
fee of $20 may apply to certain accounts with a value below the applicable share class’s initial minimum investment requirements to reduce the impact of small accounts on transfer agency fees. These minimum account balance fees are remitted to
the Fund and recorded as part of expense reductions in the Statement of Operations. For the year ended April 30, 2019, these minimum account balance fees reduced total expenses of the Fund by $20.
Distribution and service fees
The Fund has entered into an agreement with Columbia
Management Investment Distributors, Inc. (the Distributor), an affiliate of the Investment Manager and a wholly-owned subsidiary of Ameriprise Financial, for distribution and shareholder services. The Board of Trustees has approved, and the Fund has
adopted, distribution and shareholder service plans (the Plans) applicable to certain share classes, which set the distribution and service fees for the Fund. These fees are calculated daily and are intended to compensate the Distributor and/or
eligible selling and/or servicing agents for selling shares of the Fund and providing services to investors.
|
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|
21 |
Table of Contents
Notes to Financial Statements
(continued)
April 30, 2019
April 30, 2019
Under the Plans, the Fund pays a monthly combined distribution
and service fee to the Distributor at the maximum annual rate of 0.25% of the average daily net assets attributable to Class A shares of the Fund. Also under the Plans, the Fund pays a monthly service fee to the Distributor at the maximum annual
rate of 0.25% of the average daily net assets attributable to Class C shares of the Fund and a monthly distribution fee to the Distributor at the maximum annual rate of 0.75% of the average daily net assets attributable to Class C shares of the
Fund.
Sales charges (unaudited)
Sales charges, including front-end charges and CDSCs, received
by the Distributor for distributing Fund shares for the year ended April 30, 2019, if any, are listed below:
| Amount ($) | |
| Class A | 181 |
| Class C | 484 |
Expenses waived/reimbursed by the
Investment Manager and its affiliates
The Investment
Manager and certain of its affiliates have contractually agreed to waive fees and/or reimburse expenses (excluding certain fees and expenses described below) for the period(s) disclosed below, unless sooner terminated at the sole discretion of the
Board of Trustees, so that the Fund’s net operating expenses, after giving effect to fees waived/expenses reimbursed and any balance credits and/or overdraft charges from the Fund’s custodian, do not exceed the following annual rate(s)
as a percentage of the class’ average daily net assets:
|
September
1, 2018
through August 31, 2019 |
Prior
to
September 1, 2018 |
|
| Class A | 0.81% | 0.81% |
| Advisor Class | 0.56 | 0.56 |
| Class C | 1.56 | 1.56 |
| Institutional Class | 0.56 | 0.56 |
| Institutional 3 Class | 0.45 | 0.43 |
Under the agreement governing
these fee waivers and/or expense reimbursement arrangements, the following fees and expenses are excluded from the waiver/reimbursement commitment, and therefore will be paid by the Fund, if applicable: taxes (including foreign transaction taxes),
expenses associated with investments in affiliated and non-affiliated pooled investment vehicles (including mutual funds and exchange-traded funds), transaction costs and brokerage commissions, costs related to any securities lending program,
dividend expenses associated with securities sold short, inverse floater program fees and expenses, transaction charges and interest on borrowed money, interest, infrequent and/or unusual expenses and any other expenses the exclusion of which is
specifically approved by the Board of Trustees. This agreement may be modified or amended only with approval from the Investment Manager, certain of its affiliates and the Fund. In addition to the contractual agreement, the Investment Manager and
certain of its affiliates have voluntarily agreed to waive fees and/or reimburse Fund expenses (excluding certain fees and expenses described above) so that Fund level expenses (expenses directly attributable to the Fund and not to a specific share
class) are waived proportionately across all share classes, but the Fund’s net operating expenses shall not exceed the contractual annual rates listed in the table above. This arrangement may be revised or discontinued at any time. Reflected
in the contractual cap commitment, effective September 1, 2018 through August 31, 2019, is the Transfer Agent’s contractual agreement to limit total transfer agency fees to an annual rate of not more than 0.00% for Institutional 3 Class of the
average daily net assets attributable to Institutional 3 Class, unless sooner terminated at the sole discretion of the Board of Trustees. Any fees waived and/or expenses reimbursed under the expense reimbursement arrangements described above are not
recoverable by the Investment Manager or its affiliates in future periods.
Note 4. Federal tax information
The timing and character of income and capital gain
distributions are determined in accordance with income tax regulations, which may differ from GAAP because of temporary or permanent book to tax differences.
| 22 | Columbia Maryland Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Notes to Financial Statements
(continued)
April 30, 2019
April 30, 2019
At
April 30, 2019, these differences were primarily due to differing treatment for capital loss carryforwards, trustees’ deferred compensation, distributions and distribution reclassifications. To the extent these differences were permanent,
reclassifications were made among the components of the Fund’s net assets. Temporary differences do not require reclassifications.
The following reclassifications were made:
|
Undistributed
net
investment income ($) |
Accumulated
net realized (loss) ($) |
Paid
in
capital ($) |
| (14,979) | 14,979 | — |
Net investment income (loss) and
net realized gains (losses), as disclosed in the Statement of Operations, and net assets were not affected by this reclassification.
The tax character of distributions paid during the years
indicated was as follows:
| Year Ended April 30, 2019 | Year Ended April 30, 2018 | ||||||
|
Ordinary
income ($) |
Tax-exempt
income ($) |
Long-term
capital gains ($) |
Total ($) |
Ordinary
income ($) |
Tax-exempt
income ($) |
Long-term
capital gains ($) |
Total ($) |
| — | 1,634,965 | 314,771 | 1,949,736 | 10,622 | 1,896,313 | 323,964 | 2,230,899 |
Short-term capital gain
distributions, if any, are considered ordinary income distributions for tax purposes.
At April 30, 2019, the components of distributable earnings on
a tax basis were as follows:
|
Undistributed
ordinary income ($) |
Undistributed
tax-
exempt income ($) |
Undistributed
long-term capital gains ($) |
Capital
loss
carryforwards ($) |
Net
unrealized
appreciation ($) |
| — | 448,791 | — | (80,673) | 2,013,687 |
At April 30, 2019, the cost of all
investments for federal income tax purposes along with the aggregate gross unrealized appreciation and depreciation based on that cost was:
|
Federal
tax cost ($) |
Gross
unrealized
appreciation ($) |
Gross
unrealized
(depreciation) ($) |
Net
unrealized
appreciation ($) |
| 46,700,368 | 2,013,687 | — | 2,013,687 |
Tax cost of investments and
unrealized appreciation/(depreciation) may also include timing differences that do not constitute adjustments to tax basis.
The following capital loss carryforwards, determined at April
30, 2019, may be available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code. Capital loss carryforwards with no expiration are required to be utilized prior
to any capital losses which carry an expiration date. As a result of this ordering rule, capital loss carryforwards which carry an expiration date may be more likely to expire unused. In addition, for the year ended April 30, 2019, capital loss
carryforwards utilized and expired unused, if any, were as follows:
|
No
expiration
short-term ($) |
No
expiration
long-term ($) |
Total ($) | Utilized ($) | Expired ($) |
| — | 80,673 | 80,673 | — | — |
Management of the Fund has
concluded that there are no significant uncertain tax positions in the Fund that would require recognition in the financial statements. However, management’s conclusion may be subject to review and adjustment at a later date based on factors
including, but not limited to, new tax laws, regulations, and administrative interpretations (including relevant court decisions). Generally, the Fund’s federal tax returns for the prior three fiscal years remain subject to examination by the
Internal Revenue Service.
|
Columbia
Maryland Intermediate Municipal Bond Fund | Annual Report 2019
|
23 |
Table of Contents
Notes to Financial Statements
(continued)
April 30, 2019
April 30, 2019
Note 5. Portfolio information
The cost of purchases and proceeds from sales of securities,
excluding short-term investments and derivatives, if any, aggregated to $2,397,713 and $14,936,564, respectively, for the year ended April 30, 2019. The amount of purchase and sale activity impacts the portfolio turnover rate reported in the
Financial Highlights.
Note 6. Interfund
lending
Pursuant to an exemptive order granted by the
Securities and Exchange Commission, the Fund participates in a program (the Interfund Program) allowing each participating Columbia Fund (each, a Participating Fund) to lend money directly to and, except for closed-end funds and money market funds,
borrow money directly from other Participating Funds for temporary purposes. The amounts eligible for borrowing and lending under the Interfund Program are subject to certain restrictions.
Interfund loans are subject to the risk that the borrowing
fund could be unable to repay the loan when due, and a delay in repayment to the lending fund could result in lost opportunities and/or additional lending costs. The exemptive order is subject to conditions intended to mitigate conflicts of interest
arising from the Investment Manager’s relationship with each Participating Fund.
The Fund’s activity in the Interfund Program during the
year ended April 30, 2019 was as follows:
| Borrower or lender |
Average
loan
balance ($) |
Weighted
average
interest rate (%) |
Days
outstanding |
| Borrower | 600,000 | 2.82 | 4 |
Interest expense incurred by the
Fund is recorded as Interfund lending in the Statement of Operations. The Fund had no outstanding interfund loans at April 30, 2019.
Note 7. Line of credit
The Fund has access to a revolving credit facility with a
syndicate of banks led by Citibank, N.A., HSBC Bank USA, N.A. and JPMorgan Chase Bank, N.A. whereby the Fund may borrow for the temporary funding of shareholder redemptions or for other temporary or emergency purposes. The credit facility, which is
a collective agreement between the Fund and certain other funds managed by the Investment Manager or an affiliated investment manager, severally and not jointly, permits collective borrowings up to $1 billion. Interest is charged to each
participating fund based on its borrowings at a rate equal to the higher of (i) the federal funds effective rate, (ii) the one-month LIBOR rate and (iii) the overnight bank funding rate, plus in each case, 1.00%. Each borrowing under the credit
facility matures no later than 60 days after the date of borrowing. The Fund also pays a commitment fee equal to its pro rata share of the unused amount of the credit facility at a rate of 0.15% per annum. The commitment fee is included in other
expenses in the Statement of Operations. This agreement expires annually in December unless extended or renewed.
The Fund had no borrowings during the year ended April 30,
2019.
Note 8. Significant risks
Credit risk
Credit risk is the risk that the value of debt securities in
the Fund’s portfolio may decline because the issuer may default and fail to pay interest or repay principal when due. Rating agencies assign credit ratings to debt securities to indicate their credit risk. Lower rated or unrated debt
securities held by the Fund may present increased credit risk as compared to higher-rated debt securities.
Geographic concentration risk
Because the Fund invests substantially in municipal securities
issued by the state identified in the Fund’s name and political sub-divisions of that state, the Fund will be particularly affected by adverse tax, legislative, regulatory, demographic or political changes as well as changes impacting the
state’s financial, economic or other condition and prospects. In addition, because of the relatively small number of issuers of tax-exempt securities in the state, the Fund may invest a higher percentage of
| 24 | Columbia Maryland Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Notes to Financial Statements
(continued)
April 30, 2019
April 30, 2019
assets in a single
issuer and, therefore, be more exposed to the risk of loss than a fund that invests more broadly. The value of municipal and other securities owned by the Fund also may be adversely affected by future changes in federal or state income tax
laws.
Interest rate risk
Interest rate risk is the risk of losses attributable to
changes in interest rates. In general, if prevailing interest rates rise, the values of debt securities tend to fall, and if interest rates fall, the values of debt securities tend to rise. Actions by governments and central banking authorities can
result in increases in interest rates. Increasing interest rates may negatively affect the value of debt securities held by the Fund, resulting in a negative impact on the Fund’s performance and net asset value per share. In general, the
longer the maturity or duration of a debt security, the greater its sensitivity to changes in interest rates.
Liquidity risk
Liquidity risk is the risk associated with a lack of
marketability of investments which may make it difficult to sell the investment at a desirable time or price. Changing regulatory, market or other conditions or environments (for example, the interest rate or credit environments) may adversely
affect the liquidity of the Fund’s investments. The Fund may have to accept a lower selling price for the holding, sell other investments, or forego another, more appealing investment opportunity. Generally, the less liquid the market at the
time the Fund sells a portfolio investment, the greater the risk of loss or decline of value to the Fund. A less liquid market can lead to an increase in Fund redemptions, which may negatively impact Fund performance and net asset value per share,
including, for example, if the Fund is forced to sell securities in a down market.
Non-diversification risk
A non-diversified fund is permitted to invest a greater
percentage of its total assets in fewer issuers than a diversified fund. The Fund may, therefore, have a greater risk of loss from a few issuers than a similar fund that invests more broadly.
Shareholder concentration risk
At April 30, 2019, one unaffiliated shareholder of record
owned 68.3% of the outstanding shares of the Fund in one or more accounts. The Fund has no knowledge about whether any portion of those shares was owned beneficially. Subscription and redemption activity by concentrated accounts may have a
significant effect on the operations of the Fund. In the case of a large redemption, the Fund may be forced to sell investments at inopportune times, including its liquid positions, which may result in Fund losses and the Fund holding a higher
percentage of less liquid positions. Large redemptions could result in decreased economies of scale and increased operating expenses for non-redeeming Fund shareholders.
Note 9. Subsequent events
Management has evaluated the events and transactions that
have occurred through the date the financial statements were issued and noted no items requiring adjustment of the financial statements or additional disclosure.
Note 10. Information regarding pending and settled
legal proceedings
Ameriprise Financial and certain of
its affiliates have historically been involved in a number of legal, arbitration and regulatory proceedings, including routine litigation, class actions, and governmental actions, concerning matters arising in connection with the conduct of their
business activities. Ameriprise Financial believes that the Fund is not currently the subject of, and that neither Ameriprise Financial nor any of its affiliates are the subject of, any pending legal, arbitration or regulatory proceedings that are
likely to have a material adverse effect on the Fund or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Fund. Ameriprise Financial is required to make quarterly (10-Q), annual (10-K) and, as necessary,
8-K filings with the Securities and Exchange Commission (SEC) on legal and regulatory matters that relate to Ameriprise Financial and its affiliates. Copies of these filings may be obtained by accessing the SEC website at www.sec.gov.
There can be no assurance that these matters, or the adverse
publicity associated with them, will not result in increased Fund redemptions, reduced sale of Fund shares or other adverse consequences to the Fund. Further, although we believe proceedings are not likely to have a material adverse effect on the
Fund or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Fund, these proceedings are subject to uncertainties and, as such, we are unable to
|
Columbia
Maryland Intermediate Municipal Bond Fund | Annual Report 2019
|
25 |
Table of Contents
Notes to Financial Statements
(continued)
April 30, 2019
April 30, 2019
estimate the
possible loss or range of loss that may result. An adverse outcome in one or more of these proceedings could result in adverse judgments, settlements, fines, penalties or other relief that could have a material adverse effect on the consolidated
financial condition or results of operations of Ameriprise Financial.
| 26 | Columbia Maryland Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Report of Independent Registered Public Accounting Firm
To the
Board of Trustees of Columbia Funds Series Trust and Shareholders of Columbia Maryland Intermediate Municipal Bond Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and
liabilities, including the portfolio of investments, of Columbia Maryland Intermediate Municipal Bond Fund (formerly known as Columbia AMT-Free Maryland Intermediate Muni Bond Fund) (one of the funds constituting Columbia Funds Series Trust,
referred to hereafter as the "Fund") as of April 30, 2019, the related statement of operations for the year ended April 30, 2019, the statement of changes in net assets for each of the two years in the period ended April 30, 2019, including the
related notes, and the financial highlights for each of the periods indicated therein (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the
financial position of the Fund as of April 30, 2019, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended April 30, 2019 and the financial highlights for each of the
periods indicated therein in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the
Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB)
and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in
accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks
of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation
of securities owned as of April 30, 2019 by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our
opinion.
/s/PricewaterhouseCoopers LLP
Minneapolis, Minnesota
June 21, 2019
We have served as the auditor of one or more investment
companies within the Columbia Funds Complex since 1977.
|
Columbia
Maryland Intermediate Municipal Bond Fund | Annual Report 2019
|
27 |
Table of Contents
Federal Income Tax Information
(Unaudited)
(Unaudited)
The Fund hereby designates the following tax attributes for
the fiscal year ended April 30, 2019. Shareholders will be notified in early 2020 of the amounts for use in preparing 2019 income tax returns.
|
Exempt-
interest dividends |
|
| 100.00% |
Exempt-interest dividends. The percentage of net investment
income distributed during the fiscal year that qualifies as exempt-interest dividends for federal income tax purposes.
| 28 | Columbia Maryland Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
TRUSTEES AND OFFICERS
The
Board oversees the Fund’s operations and appoints officers who are responsible for day-to-day business decisions based on policies set by the Board. The following table provides basic biographical information about the Fund’s Trustees as
of the printing of this report, including their principal occupations during the past five years, although specific titles for individuals may have varied over the period. Under current Board policy, Trustees not affiliated with the Investment
Manager generally may serve through the end of the calendar year in which they reach the mandatory retirement age established by the Board.
Independent trustees
|
Name,
address, year of birth |
Position
held
with the Trust and length of service |
Principal
occupation(s)
during past five years and other relevant professional experience |
Number
of
Funds in the Columbia Funds complex overseen |
Other
directorships
held by Trustee during the past five years |
|
George
S. Batejan
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1953 |
Trustee since 1/17 | Executive Vice President, Global Head of Technology and Operations, Janus Capital Group, Inc., 2010-2016 | 119 | Former Chairman of the Board, NICSA (National Investment Company Services Association) (Executive Committee, Nominating Committee and Governance Committee), 2014-2016; former Director, Intech Investment Management, 2011-2016; former Board Member, Metro Denver Chamber of Commerce, 2015-2016; former Advisory Board Member, University of Colorado Business School, 2015-2018 |
|
Kathleen
Blatz
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1954 |
Trustee since 1/06 for RiverSource Funds and since 6/11 for Nations Funds | Attorney; specializing in arbitration and mediation; Chief Justice, Minnesota Supreme Court, 1998-2006; Associate Justice, Minnesota Supreme Court, 1996-1998; Fourth Judicial District Court Judge, Hennepin County, 1994-1996; Attorney in private practice and public service, 1984-1993; State Representative, Minnesota House of Representatives, 1979-1993, which included service on the Tax and Financial Institutions and Insurance Committees; Member and Interim Chair, Minnesota Sports Facilities Authority, January 2017-July 2017; Interim President and Chief Executive Officer, Blue Cross and Blue Shield of Minnesota (health care insurance), February-July 2018 | 119 | Trustee, BlueCross BlueShield of Minnesota since 2009 (Chair of the Business Development Committee, 2014-2017; Chair of the Governance Committee since 2017); Chair of the Robina Foundation since August 2013; former Member and Chair of the Board, Minnesota Sports Facilities Authority, January 2017-July 2017 |
|
Edward
J. Boudreau, Jr.
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1944 |
Chair of the Board since 1/18; Trustee since 6/11 for RiverSource Funds and since 1/05 for Nations Funds | Managing Director, E.J. Boudreau & Associates (consulting) since 2000; FINRA Industry Arbitrator, 2002-present; Chairman and Chief Executive Officer, John Hancock Investments (asset management), Chairman and Interested Trustee for open-end and closed-end funds offered by John Hancock, 1989-2000; John Hancock Mutual Life Insurance Company, including Senior Vice President and Treasurer and Senior Vice President Information Technology, 1968-1988 | 119 | Former Trustee, Boston Museum of Science (Chair of Finance Committee) 1985-2013; former Trustee, BofA Funds Series Trust (11 funds), 2005-2011 |
|
Columbia
Maryland Intermediate Municipal Bond Fund | Annual Report 2019
|
29 |
Table of Contents
TRUSTEES AND OFFICERS
(continued)
Independent trustees
(continued)
|
Name,
address, year of birth |
Position
held
with the Trust and length of service |
Principal
occupation(s)
during past five years and other relevant professional experience |
Number
of
Funds in the Columbia Funds complex overseen |
Other
directorships
held by Trustee during the past five years |
|
Pamela
G. Carlton
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1954 |
Trustee since 7/07 for RiverSource Funds and since 6/11 for Nations Funds | President, Springboard — Partners in Cross Cultural Leadership (consulting company) since 2003; Managing Director of US Equity Research, JP Morgan Chase, 1999-2003; Director of US Equity Research, Chase Asset Management, 1996-1999; Co-Director Latin America Research, 1993-1996, COO Global Research, 1992-1996, Co-Director of US Research, 1991-1992, Investment Banker, Morgan Stanley, 1982-1991 | 119 | Trustee, New York Presbyterian Hospital Board (Executive Committee and Chair of Human Resources Committee) since 1996; Director, Laurel Road Bank (Audit Committee) since 2017 |
|
Patricia
M. Flynn
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1950 |
Trustee since 11/04 for RiverSource Funds and since 6/11 for Nations Funds | Trustee Professor of Economics and Management, Bentley University since 1976 (also teaches and conducts research on corporate governance); Dean, McCallum Graduate School of Business, Bentley University, 1992-2002 | 119 | Trustee, MA Taxpayers Foundation since 1997; Board of Directors, The MA Business Roundtable since 2003; Board of Governors, Innovation Institute, MA Technology Collaborative since 2010 |
|
Brian
J. Gallagher
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1954 |
Trustee since 12/17 | Retired; Partner with Deloitte & Touche LLP and its predecessors, 1977-2016 | 117 | Trustee, Catholic Schools Foundation since 2004 |
|
Catherine
James Paglia
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1952 |
Trustee since 11/04 for RiverSource Funds and since 6/11 for Nations Funds | Director, Enterprise Asset Management, Inc. (private real estate and asset management company) since September 1998; Managing Director and Partner, Interlaken Capital, Inc., 1989-1997; Managing Director, Morgan Stanley, 1982-1989; Vice President, Investment Banking, 1980-1982, Associate, Investment Banking, 1976-1980, Dean Witter Reynolds, Inc. | 119 | Director, Valmont Industries, Inc. (irrigation systems manufacturer) since 2012; Trustee, Carleton College (on the Investment Committee); Trustee, Carnegie Endowment for International Peace (on the Investment Committee) |
|
Anthony
M. Santomero
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1946 |
Trustee since 6/11 for RiverSource Funds and since 1/08 for Nations Funds | Richard K. Mellon Professor Emeritus of Finance, The Wharton School, University of Pennsylvania, since 2002; Senior Advisor, McKinsey & Company (consulting), 2006-2008; President, Federal Reserve Bank of Philadelphia, 2000- 2006; Professor of Finance, The Wharton School, University of Pennsylvania, 1972-2002 | 119 | Trustee, Penn Mutual Life Insurance Company since March 2008; Director, Renaissance Reinsurance Ltd. since May 2008; former Trustee, BofA Funds Series Trust (11 funds), 2008-2011; former Director, Citigroup Inc. and Citibank, N.A., 2009-2019 |
| 30 | Columbia Maryland Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
TRUSTEES AND OFFICERS
(continued)
Independent trustees
(continued)
|
Name,
address, year of birth |
Position
held
with the Trust and length of service |
Principal
occupation(s)
during past five years and other relevant professional experience |
Number
of
Funds in the Columbia Funds complex overseen |
Other
directorships
held by Trustee during the past five years |
|
Minor
M. Shaw
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1947 |
Trustee since 6/11 for RiverSource Funds and since 2003 for Nations Funds | President, Micco LLC (private investments) since 2011; President, Micco Corp. (family investment business), 1998-2011 | 119 | Director, BlueCross BlueShield of South Carolina since April 2008; Board Chair, Hollingsworth Funds since 2016; Advisory Board member, Duke Energy Corp. since October 2016; Chair of the Duke Endowment; Chair of Greenville – Spartanburg Airport Commission; former Trustee, BofA Funds Series Trust (11 funds), 2003-2011; former Director, Piedmont Natural Gas, 2004-2016; former Director, National Association of Corporate Directors, Carolinas Chapter, 2013-2018 |
|
Sandra
Yeager
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1964 |
Trustee since 12/17 | Retired; President and founder, Hanoverian Capital, LLC (SEC registered investment advisor firm), 2008-2016; Managing Director, DuPont Capital, 2006-2008; Managing Director, Morgan Stanley Investment Management, 2004-2006; Senior Vice President, Alliance Bernstein, 1990-2004 | 117 | Director, NAPE Education Foundation since October 2016 |
Interested trustee affiliated with Investment
Manager*
|
Name,
address, year of birth |
Position held with the Trust and length of service |
Principal
occupation(s) during the
past five years and other relevant professional experience |
Number
of
Funds in the Columbia Funds complex overseen |
Other
directorships
held by Trustee during the past five years |
|
William
F. Truscott
c/o Columbia Management Investment Advisers, LLC 225 Franklin St. Boston, MA 02110 1960 |
Trustee since 11/01 for RiverSource Funds and since 6/11 for Nations Funds; Senior Vice President since 2002 for RiverSource Funds and since 5/10 for Nations Funds | Chairman of the Board and President, Columbia Management Investment Advisers, LLC since May 2010 and February 2012, respectively; Chief Executive Officer, Global Asset Management, Ameriprise Financial, Inc. since September 2012 (previously Chief Executive Officer, U.S. Asset Management & President, Annuities, May 2010 - September 2012); Director and Chief Executive Officer, Columbia Management Investment Distributors, Inc. since May 2010 and February 2012, respectively; Chairman of the Board and Chief Executive Officer, RiverSource Distributors, Inc. since 2006; Director, Threadneedle Asset Management Holdings, SARL since 2014; President and Chief Executive Officer, Ameriprise Certificate Company, 2006 - August 2012. | 188 | Chairman of the Board, Columbia Management Investment Advisers, LLC since May 2010; Director, Columbia Management Investment Distributors, Inc. since May 2010; former Director, Ameriprise Certificate Company, 2006-January 2013 |
| * | Interested person (as defined under the 1940 Act) by reason of being an officer, director, security holder and/or employee of the Investment Manager or Ameriprise Financial. |
|
Columbia
Maryland Intermediate Municipal Bond Fund | Annual Report 2019
|
31 |
Table of Contents
TRUSTEES AND OFFICERS
(continued)
Nations Funds refer to the Funds within the Columbia Funds
Complex that historically bore the Nations brand and includes series of Columbia Funds Series Trust. RiverSource Funds refer to the Funds within the Columbia Funds Complex that historically bore the RiverSource brand and includes series of Columbia
Funds Series Trust II.
The Statement of Additional
Information has additional information about the Fund’s Board members and is available, without charge, upon request by calling 800.345.6611, visiting columbiathreadneedleus.com/investor/ or contacting your financial intermediary.
| 32 | Columbia Maryland Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
TRUSTEES AND OFFICERS
(continued)
The Board has appointed officers who are responsible for
day-to-day business decisions based on policies it has established. The officers serve at the pleasure of the Board. The following table provides basic information about the Officers of the Fund as of the printing of this report, including principal
occupations during the past five years, although their specific titles may have varied over the period. In addition to Mr. Truscott, who is Senior Vice President, the Fund’s other officers are:
Fund officers
|
Name,
address and year of birth |
Position
and year
first appointed to position for any Fund in the Columbia Funds complex or a predecessor thereof |
Principal occupation(s) during past five years |
|
Christopher
O. Petersen
5228 Ameriprise Financial Center Minneapolis, MN 55474 Born 1970 |
President and Principal Executive Officer (2015) | Vice President and Lead Chief Counsel, Ameriprise Financial, Inc. since January 2015 (previously Vice President and Chief Counsel, January 2010 - December 2014; officer of Columbia Funds and affiliated funds since 2007. |
|
Michael
G. Clarke
225 Franklin Street Boston, MA 02110 Born 1969 |
Chief Financial Officer (Principal Financial Officer) (2009) and Senior Vice President (2019) | Vice President, Head of North American Operations, and Co-Head of Global Operations, Columbia Management Investment Advisers, LLC, since June 2019 (previously Vice President – Accounting and Tax, May 2010 - May 2019); senior officer of Columbia Funds and affiliated funds since 2002 (previously Treasurer and Chief Accounting Officer, January 2009 - January 2019 and December 2015 - January 2019, respectively). |
|
Joseph
Beranek
5890 Ameriprise Financial Center Minneapolis, MN 55474 Born 1965 |
Treasurer and Chief Accounting Officer (Principal Accounting Officer) (2019) | Vice President — Mutual Fund Accounting and Financial Reporting, Columbia Management Investment Advisers, LLC, since December 2018 and March 2017, respectively (previously Vice President — Pricing and Corporate Actions, May 2010 - March 2017). |
|
Paul
B. Goucher
485 Lexington Avenue New York, NY 10017 Born 1968 |
Senior Vice President (2011) and Assistant Secretary (2008) | Senior Vice President and Assistant General Counsel, Ameriprise Financial, Inc. since January 2017 (previously Vice President and Lead Chief Counsel, November 2008 - January 2017 and January 2013 - January 2017, respectively); Vice President, Chief Legal Officer and Assistant Secretary, Columbia Management Investment Advisers, LLC since March 2015 (previously Vice President and Assistant Secretary, May 2010 – March 2015). |
|
Thomas
P. McGuire
225 Franklin Street Boston, MA 02110 Born 1972 |
Senior Vice President and Chief Compliance Officer (2012) | Vice President — Asset Management Compliance, Ameriprise Financial, Inc., since May 2010; Chief Compliance Officer, Ameriprise Certificate Company since September 2010. |
|
Colin
Moore
225 Franklin Street Boston, MA 02110 Born 1958 |
Senior Vice President (2010) | Executive Vice President and Global Chief Investment Officer, Ameriprise Financial, Inc., since July 2013; Executive Vice President and Global Chief Investment Officer, Columbia Management Investment Advisers, LLC since July 2013. |
|
Ryan
C. Larrenaga
225 Franklin Street Boston, MA 02110 Born 1970 |
Senior Vice President (2017), Chief Legal Officer (2017), and Secretary (2015) | Vice President and Chief Counsel, Ameriprise Financial, Inc. since August 2018 (previously Vice President and Group Counsel, August 2011 - August 2018); officer of Columbia Funds and affiliated funds since 2005. |
|
Michael
E. DeFao
225 Franklin Street Boston, MA 02110 Born 1968 |
Vice President (2011) and Assistant Secretary (2010) | Vice President and Chief Counsel, Ameriprise Financial, Inc. since May 2010. |
|
Lyn
Kephart-Strong
5228 Ameriprise Financial Center Minneapolis, MN 55474 Born 1960 |
Vice President (2015) | President, Columbia Management Investment Services Corp. since October 2014; Vice President & Resolution Officer, Ameriprise Trust Company since August 2009. |
|
Columbia
Maryland Intermediate Municipal Bond Fund | Annual Report 2019
|
33 |
Table of Contents
Additional information
The
Fund mails one shareholder report to each shareholder address, unless such shareholder elected to receive shareholder reports from the Fund electronically. If you would like more than one report, please call shareholder services at 800.345.6611 and
additional reports will be sent to you.
Proxy voting
policies and procedures
The policy of the Board of
Trustees is to vote the proxies of the companies in which the Fund holds investments consistent with the procedures as stated in the Statement of Additional Information (SAI). You may obtain a copy of the SAI without charge by calling 800.345.6611;
contacting your financial intermediary; visiting columbiathreadneedleus.com/investor/; or searching the website of the Securities and Exchange Commission (SEC) at sec.gov. Information regarding how the Fund voted proxies relating to portfolio
securities is filed with the SEC by August 31st for the most recent 12-month period ending June 30th of that year, and is available without charge by visiting columbiathreadneedleus.com/investor/, or searching the website of the SEC at
sec.gov.
Quarterly schedule of investments
The Fund files a complete schedule of portfolio holdings
with the SEC for the first and third quarters of each fiscal year on Form N-Q or Form N-PORT (available for filings after March 31, 2019). The Fund’s Form N-Q or Form N-PORT is available on the SEC’s website at sec.gov. The Fund’s
complete schedule of portfolio holdings, as filed on Form N-Q or Form N-PORT, can also be obtained without charge, upon request, by calling 800.345.6611.
Additional Fund information
For more information about the Fund, please visit
columbiathreadneedleus.com/investor/ or call 800.345.6611. Customer Service Representatives are available to answer your questions Monday through Friday from 8 a.m. to 7 p.m. Eastern time.
Fund investment manager
Columbia Management Investment Advisers, LLC
225 Franklin Street
Boston, MA 02110
Fund distributor
Columbia Management Investment Distributors, Inc.
225 Franklin Street
Boston, MA 02110
Fund transfer agent
Columbia Management Investment Services Corp.
P.O. Box 219104
Kansas City, MO 64121-9104
| 34 | Columbia Maryland Intermediate Municipal Bond Fund | Annual Report 2019 |
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[THIS PAGE INTENTIONALLY LEFT BLANK]
Table of Contents
Columbia Maryland Intermediate Municipal Bond Fund
P.O. Box 219104
Kansas City, MO 64121-9104
Please read and consider the investment objectives, risks,
charges and expenses for any fund carefully before investing. For a prospectus and summary prospectus, which contains this and other important information about the Fund, go to
columbiathreadneedleus.com/investor/ . The Fund is distributed by Columbia Management Investment Distributors, Inc., member FINRA, and managed by Columbia Management Investment Advisers, LLC.
columbiathreadneedleus.com/investor/ . The Fund is distributed by Columbia Management Investment Distributors, Inc., member FINRA, and managed by Columbia Management Investment Advisers, LLC.
Columbia Threadneedle Investments (Columbia Threadneedle) is
the global brand name of the Columbia and Threadneedle group of companies. All rights reserved.
© 2019 Columbia Management Investment Advisers, LLC.
columbiathreadneedleus.com/investor/
ANN190_04_J01_(06/19)
Table of Contents
Annual
Report
April 30, 2019
April 30, 2019
Columbia Georgia Intermediate Municipal Bond
Fund
(formerly Columbia AMT-Free Georgia
Intermediate Muni Bond Fund)
Beginning on January 1, 2021, as permitted by regulations
adopted by the Securities and Exchange Commission, paper copies of the Fund’s annual and semiannual shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the
reports will be made available on the Fund’s website (columbiathreadneedleus.com/investor/), and each time a report is posted you will be notified by mail and provided with a website address to access the report.
If you have already elected to receive shareholder reports
electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically at any time by contacting your financial intermediary (such
as a broker-dealer or bank) or, for Fund shares held directly with the Fund, by calling 800.345.6611 or by enrolling in “eDelivery” by logging into your account at columbiathreadneedleus.com/investor/.
You may elect to receive all future reports in paper free of
charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue receiving paper copies of your shareholder reports. If you invest directly with the Fund, you can call 800.345.6611 to
let the Fund know you wish to continue receiving paper copies of your shareholder reports. Your election to receive paper reports will apply to all Columbia Funds held in your account if you invest through a financial intermediary or all Columbia
Funds held with the fund complex if you invest directly with the Fund.
Not FDIC Insured • No bank guarantee • May lose
value
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Columbia Georgia Intermediate Municipal Bond
Fund | Annual Report 2019
Table of Contents
Fund at a Glance
Investment objective
Columbia Georgia Intermediate
Municipal Bond Fund (the Fund) seeks current income exempt from U.S. federal income tax and Georgia individual income tax, consistent with moderate fluctuation of principal.
Portfolio
management
Paul Fuchs,
CFA
Lead
Portfolio Manager
Managed Fund
since 2016
Anders Myhran,
CFA
Portfolio
Manager
Managed Fund
since May 2019
Deborah
Vargo
Portfolio
Manager
Managed Fund
since 2017
Returns for Class A shares are shown
with and without the maximum initial sales charge of 3.00%. Returns for Class C shares are shown with and without the 1.00% contingent deferred sales charge for the first year only. The Fund’s other share classes are not subject to sales
charges and have limited eligibility. Please see the Fund’s prospectus for details. Performance for different share classes will vary based on differences in sales charges and fees associated with each share class. All results shown assume
reinvestment of distributions during the period. Returns do not reflect the deduction of taxes that a shareholder may pay on Fund distributions or on the redemption of Fund shares. Performance results reflect the effect of any fee waivers or
reimbursements of Fund expenses by Columbia Management Investment Advisers, LLC and/or any of its affiliates. Absent these fee waivers or expense reimbursement arrangements, performance results would have been lower.
The performance information shown represents past performance and
is not a guarantee of future results. The investment return and principal value of your investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than
the performance information shown. You may obtain performance information current to the most recent month-end by contacting your financial intermediary, visiting columbiathreadneedleus.com/investor/ or calling 800.345.6611.
| * | The returns shown for periods prior to the share class inception date (including returns for the Life of the Fund, if shown, which are since Fund inception) include the returns of the Fund’s oldest share class. These returns are adjusted to reflect any higher class-related operating expenses of the newer share classes, as applicable. Please visit columbiathreadneedleus.com/investor/investment-products /mutual-funds/appended-performance for more information. |
The Bloomberg Barclays 3–15 Year Blend Municipal Bond
Index is an unmanaged index that tracks the performance of municipal bonds issued after December 31, 1990, with remaining maturities between 2 and 17 years and at least $7 million in principal amount outstanding.
Indices are not available for investment, are not
professionally managed and do not reflect sales charges, fees, brokerage commissions, taxes or other expenses of investing. Securities in the Fund may not match those in an index.
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Georgia Intermediate Municipal Bond Fund | Annual Report 2019
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Table of Contents
Fund at a Glance
(continued)
Performance of a
hypothetical $10,000 investment (April 30, 2009 — April 30, 2019)
The chart above shows the
change in value of a hypothetical $10,000 investment in Class A shares of Columbia Georgia Intermediate Municipal Bond Fund during the stated time period, and does not reflect the deduction of taxes that a shareholder may pay on Fund distributions
or on the redemption of Fund shares.
| Quality breakdown (%) (at April 30, 2019) | |
| AAA rating | 10.1 |
| AA rating | 53.6 |
| A rating | 28.8 |
| BBB rating | 5.6 |
| Not rated | 1.9 |
| Total | 100.0 |
Percentages indicated are based
upon total fixed income investments.
Bond ratings apply
to the underlying holdings of the Fund and not the Fund itself and are divided into categories ranging from highest to lowest credit quality, determined by using the middle rating of Moody’s, S&P and Fitch, after dropping the highest and
lowest available ratings. When ratings are available from only two rating agencies, the lower rating is used. When a rating is available from only one rating agency, that rating is used. When a bond is not rated by any rating agency, it is
designated as “Not rated.” Credit quality ratings assigned by a rating agency are subjective opinions, not statements of fact, and are subject to change, including daily. The ratings assigned by credit rating agencies are but one of the
considerations that the Investment Manager and/or Fund’s subadviser incorporates into its credit analysis process, along with such other issuer-specific factors as cash flows, capital structure and leverage ratios, ability to de-leverage
(repay) through free cash flow, quality of management, market positioning and access to capital, as well as such security-specific factors as the terms of the security (e.g., interest rate and time to maturity) and the amount and type of any
collateral.
| 4 | Columbia Georgia Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Manager Discussion of Fund Performance
For
the 12-month period that ended April 30, 2019, the Fund’s Class A shares returned 4.53% excluding sales charges, and its Institutional shares returned 4.90%. The Fund’s benchmark, the Bloomberg Barclays 3-15 Year Blend Municipal Bond
Index, returned 5.91% for the same time period. Georgia municipals underperformed the national benchmark, largely as a result of their above-average credit quality.
Market overview
Municipal bonds generated healthy gains in the 12-month
reporting period, with the bulk of the rally occurring from November 2018 onward. Municipals performed reasonably well from May through August on the strength of falling U.S. Treasury yields and the combination of strong investor demand and reduced
new-issue supply in the tax-exempt market. Conditions became less favorable in September 2018, when U.S. Treasury yields climbed on indications of continued strength in the U.S. economy and fears about inflation pressures that could result from a
trade war with China. The negative trend persisted in October, as yields continued to rise on concerns that the U.S. Federal Reserve (Fed) would take a more aggressive approach to raising interest rates in 2019 than investors had been
expecting.
Sentiment again shifted abruptly in early
November, causing yields to fall sharply through the end of 2018. The fixed-income markets rallied significantly due to signs of slowing global growth, volatility in the higher risk assets, and expectations that the Fed would in fact adopt a more
accommodative stance. In addition, various geopolitical factors, including uncertainty surrounding the U.S.-China trade dispute, Brexit negotiations, and the U.S. government shutdown, fueled a “flight to quality” into bonds. Municipals
rallied as a result, helping the major national indexes finish 2018 in positive territory.
The rally continued into the New Year, leading to the largest
first-quarter gain for the tax-exempt market since 2014. The first quarter of 2019 was also the sixth-best for municipals in the past 30 years. During this time, bonds were well supported by the backdrop of slow global growth and the increasingly
accommodative policies of the world’s major central banks. Supply-and-demand factors also remained highly favorable. Municipals rallied further in April, helping them to post a solid gain for the full 12 months.
Longer term bonds outpaced shorter term issues in the period,
mirroring trends in the Treasury market, while lower quality bonds strongly outperformed their higher rated counterparts. The “risk-on” environment of January to April led to robust investor demand for higher risk assets, lifting the
returns of higher yielding bonds in all fixed-income categories.
Georgia’s higher average credit quality weighed on
performance
Georgia’s intermediate municipal
market lagged the broader U.S. indexes in the period. The state’s market was of a much higher quality level than the nation as a whole, with a weighting in AAA bonds that is 2.5 times the national index. This translated to both a smaller
contribution from yield and less ability to benefit from the outperformance of lower rated bonds.
The state’s economic fundamentals remained robust,
particularly in Atlanta and the surrounding areas. The economic strength was driven by growth in construction jobs and logistic activities tied to the Hartsfield-Jackson airport and the Port of Savannah. The state’s revenues and financial
position have grown steadily since the low levels of 2009, and Georgia’s debt and pension liabilities were moderate compared to other states. Tax collections have also been robust: year-to-date through the end of April, collections were about
5% higher than the same interval in the prior year.
Contributors and detractors
The Fund benefitted from the very strong returns of its
positions in education and water & sewer issues, which together accounted for about a third of the total portfolio.
A troubled multi-family housing issuer, Eagles Trace
Apartments, was sold out of the portfolio at par, producing the highest return for any position during the period. The bonds had been evaluated well below par prior to the property being sold and all debt paid off by the new owner.
Given the outperformance for longer maturity and lower rated
investment-grade bonds, the Fund benefitted from its overweights in A and BBB rated issues, as well as those maturing in 12 years and longer.
|
Columbia
Georgia Intermediate Municipal Bond Fund | Annual Report 2019
|
5 |
Table of Contents
Manager Discussion of Fund Performance
(continued)
The Fund’s positioning with respect to duration
(interest-rate sensitivity) detracted from results. Portfolio duration drifted lower during the course of the period, which hurt performance in the strong rally of the second half of the period. Opportunities to buy longer dated intermediate issues
were limited, but we continued to look for investment candidates in this maturity range. The shortness of the portfolio’s duration was particularly evident in certain specific sectors, including electric utilities and hospitals.
The Fund’s allocation to bonds maturing in less than two
years detracted from performance, as these holdings produced much smaller gains than the benchmark. We reduced the size of this position as the period progressed, while increasing the Fund’s weighting in bonds with maturities of ten years and
longer. We made a corresponding reduction to the Fund’s position in pre-refunded securities, which tend to have maturities of two years and shorter.
Fund positioning
At the close of the period, we were fairly comfortable with
the overall interest rate environment due to the combination of muted inflation, the late stage of the economic expansion, and the Fed’s signals that it intends to remain on hold through the end of 2019. In addition, ongoing geopolitical
issues, including trade negotiations with China, Brexit uncertainty, and Washington infighting, continue to put downward pressure on interest rates. With this as the backdrop, we continued to favor opportunities on the longer end of the
intermediate-term range due to their higher income. The Fund’s quality profile was neutral relative to the benchmark, but we remained on the lookout for opportunities to add lower rated investment-grade bonds. The Fund continued to have
meaningful weighting in the local general obligation, education, water & sewer, and hospital sectors.
Fixed-income securities present
issuer
default risk. The Fund invests substantially in
municipal securities
and will be affected by tax, legislative, regulatory, demographic or political changes, as well
as changes impacting a state’s financial, economic or other conditions. A relatively small number of tax-exempt issuers may necessitate the Fund investing more heavily in a single issuer and, therefore, be more exposed to the risk of loss than
a fund that invests more broadly. The value of the Fund’s portfolio may be more volatile than a more
geographically diversified
fund.
Prepayment and extension
risk
exists because the timing of payments on a loan, bond or other investment may accelerate when interest rates fall or decelerate when interest rates rise which may reduce investment opportunities and potential returns. A rise in
interest rates
may result in a price decline of fixed-income instruments held by the Fund, negatively impacting its performance and NAV. Falling rates may result in the Fund investing in lower yielding debt
instruments, lowering the Fund’s income and yield. These risks may be heightened for longer maturity and duration securities.
Non-investment-grade
(high-yield or junk) securities present greater price
volatility and more risk to principal and income than higher rated securities.
Market
risk may affect a single issuer, sector of the economy, industry or the market as a whole. Federal and state
tax
rules apply to capital gain distributions and any gains or losses on sales. Income may be subject to state or local taxes.
Liquidity
risk is associated with the difficulty
of selling underlying investments at a desirable time or price. See the Fund’s prospectus for more information on these and other risks.
The views expressed in this report reflect the current views of
the respective parties. These views are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict, so actual outcomes and results may differ significantly from the views expressed.
These views are subject to change at any time based upon economic, market or other conditions and the respective parties disclaim any responsibility to update such views. These views may not be relied on as investment advice and, because investment
decisions for a Columbia fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any particular Columbia fund. References to specific securities should not be construed as a recommendation or
investment advice.
| 6 | Columbia Georgia Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Understanding Your Fund’s Expenses
(Unaudited)
(Unaudited)
As an investor, you incur two types of costs. There are
shareholder transaction costs, which generally include sales charges on purchases and may include redemption fees. There are also ongoing fund costs, which generally include management fees, distribution and/or service fees, and other fund expenses.
The following information is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to help you compare these costs with the ongoing costs of investing in other mutual funds.
Analyzing your Fund’s expenses
To illustrate these ongoing costs, we have provided examples
and calculated the expenses paid by investors in each share class of the Fund during the period. The actual and hypothetical information in the table is based on an initial investment of $1,000 at the beginning of the period indicated and held for
the entire period. Expense information is calculated two ways and each method provides you with different information. The amount listed in the “Actual” column is calculated using the Fund’s actual operating expenses and total
return for the period. You may use the Actual information, together with the amount invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000
= 8.6), then multiply the results by the expenses paid during the period under the “Actual” column. The amount listed in the “Hypothetical” column assumes a 5% annual rate of return before expenses (which is not the
Fund’s actual return) and then applies the Fund’s actual expense ratio for the period to the hypothetical return. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end
of the period or the expenses you paid during the period. See “Compare with other funds” below for details on how to use the hypothetical data.
Compare with other funds
Since all mutual funds are required to include the same
hypothetical calculations about expenses in shareholder reports, you can use this information to compare the ongoing cost of investing in the Fund with other funds. To do so, compare the hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of other funds. As you compare hypothetical examples of other funds, it is important to note that hypothetical examples are meant to highlight the ongoing costs of investing in a fund only and do not reflect any
transaction costs, such as sales charges, or redemption or exchange fees. Therefore, the hypothetical calculations are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. If
transaction costs were included in these calculations, your costs would be higher.
Expenses paid during the period
are equal to the annualized expense ratio for each class as indicated above, multiplied by the average account value over the period and then multiplied by the number of days in the Fund’s most recent fiscal half year and divided by 365.
Expenses do not include fees and expenses incurred indirectly
by the Fund from its investment in underlying funds, including affiliated and non-affiliated pooled investment vehicles, such as mutual funds and exchange-traded funds.
Had Columbia Management Investment Advisers, LLC and/or certain
of its affiliates not waived/reimbursed certain fees and expenses, account value at the end of the period would have been reduced.
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Columbia
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7 |
Table of Contents
Portfolio of Investments
April 30, 2019
April 30, 2019
(Percentages represent value of investments compared to net
assets)
Investments in securities
The accompanying Notes to Financial Statements are an integral part
of this statement.
| 8 | Columbia Georgia Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Portfolio of Investments
(continued)
April 30, 2019
April 30, 2019
The accompanying Notes to Financial Statements are an integral part
of this statement.
|
Columbia
Georgia Intermediate Municipal Bond Fund | Annual Report 2019
|
9 |
Table of Contents
Portfolio of Investments
(continued)
April 30, 2019
April 30, 2019
| Municipal Bonds (continued) | ||||
| Issue Description |
Coupon
Rate |
Principal
Amount ($) |
Value ($) | |
| Villa Rica Public Facilities Authority | ||||
| Refunding Revenue Bonds | ||||
| Water & Sewer Project | ||||
| Series 2015 | ||||
| 03/01/2031 | 5.000% | 750,000 | 853,830 | |
| Total | 6,302,148 | |||
|
Total
Municipal Bonds
(Cost $37,054,744) |
38,477,865 | |||
| Money Market Funds 1.3% | ||
| Shares | Value ($) | |
| Dreyfus Tax-Exempt Cash Management Fund, Institutional Shares, 1.981% (e) | 502,633 | 502,633 |
|
Total
Money Market Funds
(Cost $502,633) |
502,633 | |
|
Total
Investments in Securities
(Cost: $38,057,377) |
39,480,498 | |
| Other Assets & Liabilities, Net | 863,074 | |
| Net Assets | 40,343,572 | |
Notes to Portfolio of Investments
| (a) | The Fund is entitled to receive principal and interest from the guarantor after a day or a week’s notice or upon maturity. The maturity date disclosed represents the final maturity. |
| (b) | Represents a variable rate security where the coupon rate adjusts on specified dates (generally daily or weekly) using the prevailing money market rate. The interest rate shown was the current rate as of April 30, 2019. |
| (c) | Represents privately placed and other securities and instruments exempt from Securities and Exchange Commission registration (collectively, private placements), such as Section 4(a)(2) and Rule 144A eligible securities, which are often sold only to qualified institutional buyers. The Fund may invest in private placements determined to be liquid as well as those determined to be illiquid. Private placements may be determined to be liquid under guidelines established by the Fund’s Board of Trustees. At April 30, 2019, the total value of these securities amounted to $748,540, which represents 1.86% of total net assets. |
| (d) | Zero coupon bond. |
| (e) | The rate shown is the seven-day current annualized yield at April 30, 2019. |
Abbreviation Legend
| AGM | Assured Guaranty Municipal Corporation |
Fair value measurements
The Fund categorizes its fair value measurements
according to a three-level hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs by prioritizing that the most observable input be used when available. Observable inputs are those that market participants
would use in pricing an investment based on market data obtained from sources independent of the reporting entity. Unobservable inputs are those that reflect the Fund’s assumptions about the information market participants would use in pricing
an investment. An investment’s level within the fair value hierarchy is based on the lowest level of any input that is deemed significant to the asset’s or liability’s fair value measurement. The input levels are not necessarily an
indication of the risk or liquidity associated with investments at that level. For example, certain U.S. government securities are generally high quality and liquid, however, they are reflected as Level 2 because the inputs used to determine fair
value may not always be quoted prices in an active market.
The accompanying Notes to Financial Statements are an integral part of this
statement.
| 10 | Columbia Georgia Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Portfolio of Investments
(continued)
April 30, 2019
April 30, 2019
Fair value
measurements
(continued)
Fair value inputs are summarized in the three broad levels listed below:
Fair value inputs are summarized in the three broad levels listed below:
| ■ | Level 1 — Valuations based on quoted prices for investments in active markets that the Fund has the ability to access at the measurement date. Valuation adjustments are not applied to Level 1 investments. |
| ■ | Level 2 — Valuations based on other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risks, etc.). |
| ■ | Level 3 — Valuations based on significant unobservable inputs (including the Fund’s own assumptions and judgment in determining the fair value of investments). |
Inputs that are used in determining fair value of an investment
may include price information, credit data, volatility statistics, and other factors. These inputs can be either observable or unobservable. The availability of observable inputs can vary between investments, and is affected by various factors such
as the type of investment, and the volume and level of activity for that investment or similar investments in the marketplace. The inputs will be considered by the Investment Manager, along with any other relevant factors in the calculation of an
investment’s fair value. The Fund uses prices and inputs that are current as of the measurement date, which may include periods of market dislocations. During these periods, the availability of prices and inputs may be reduced for many
investments. This condition could cause an investment to be reclassified between the various levels within the hierarchy.
Investments falling into the Level 3 category are primarily
supported by quoted prices from brokers and dealers participating in the market for those investments. However, these may be classified as Level 3 investments due to lack of market transparency and corroboration to support these quoted prices.
Additionally, valuation models may be used as the pricing source for any remaining investments classified as Level 3. These models may rely on one or more significant unobservable inputs and/or significant assumptions by the Investment Manager.
Inputs used in valuations may include, but are not limited to, financial statement analysis, capital account balances, discount rates and estimated cash flows, and comparable company data.
Under the direction of the Fund’s Board of Trustees (the
Board), the Investment Manager’s Valuation Committee (the Committee) is responsible for overseeing the valuation procedures approved by the Board. The Committee consists of voting and non-voting members from various groups within the
Investment Manager’s organization, including operations and accounting, trading and investments, compliance, risk management and legal.
The Committee meets at least monthly to review and approve
valuation matters, which may include a description of specific valuation determinations, data regarding pricing information received from approved pricing vendors and brokers and the results of Board-approved valuation control policies and
procedures (the Policies). The Policies address, among other things, instances when market quotations are or are not readily available, including recommendations of third party pricing vendors and a determination of appropriate pricing
methodologies; events that require specific valuation determinations and assessment of fair value techniques; securities with a potential for stale pricing, including those that are illiquid, restricted, or in default; and the effectiveness of third
party pricing vendors, including periodic reviews of vendors. The Committee meets more frequently, as needed, to discuss additional valuation matters, which may include the need to review back-testing results, review time-sensitive information or
approve related valuation actions. The Committee reports to the Board, with members of the Committee meeting with the Board at each of its regularly scheduled meetings to discuss valuation matters and actions during the period, similar to those
described earlier.
For investments categorized as Level 3,
the Committee monitors information similar to that described above, which may include: (i) data specific to the issuer or comparable issuers, (ii) general market or specific sector news and (iii) quoted prices and specific or similar security
transactions. The Committee considers this data and any changes from prior periods in order to assess the reasonableness of observable and unobservable inputs, any assumptions or internal models used to value those securities and changes in fair
value. This data is also used to corroborate, when available, information received from approved pricing vendors and brokers. Various factors impact the frequency of monitoring this information (which may occur as often as daily). However, the
Committee may determine that changes to inputs, assumptions and models are not required as a result of the monitoring procedures performed.
The following table is a summary of the inputs used to value the
Fund’s investments at April 30, 2019:
|
Level
1
quoted prices in active markets for identical assets ($) |
Level
2
other significant observable inputs ($) |
Level
3
significant unobservable inputs ($) |
Total ($) | |
| Investments in Securities | ||||
| Floating Rate Notes | — | 500,000 | — | 500,000 |
| Municipal Bonds | — | 38,477,865 | — | 38,477,865 |
| Money Market Funds | 502,633 | — | — | 502,633 |
| Total Investments in Securities | 502,633 | 38,977,865 | — | 39,480,498 |
See the Portfolio of Investments for
all investment classifications not indicated in the table.
The Fund’s assets assigned to the Level 2 input category
are generally valued using the market approach, in which a security’s value is determined through reference to prices and information from market transactions for similar or identical assets.
There were no transfers of financial assets between levels
during the period.
The accompanying Notes to Financial Statements are an integral part of this
statement.
|
Columbia
Georgia Intermediate Municipal Bond Fund | Annual Report 2019
|
11 |
Table of Contents
Statement of Assets and Liabilities
April 30, 2019
April 30, 2019
| Assets | |
| Investments in securities, at value | |
| Unaffiliated issuers (cost $38,057,377) | $39,480,498 |
| Cash | 428,022 |
| Receivable for: | |
| Capital shares sold | 171,966 |
| Interest | 519,391 |
| Expense reimbursement due from Investment Manager | 234 |
| Prepaid expenses | 537 |
| Total assets | 40,600,648 |
| Liabilities | |
| Payable for: | |
| Capital shares purchased | 16,321 |
| Distributions to shareholders | 90,329 |
| Management services fees | 517 |
| Distribution and/or service fees | 130 |
| Transfer agent fees | 5,603 |
| Compensation of board members | 105,723 |
| Audit fees | 36,295 |
| Other expenses | 2,158 |
| Total liabilities | 257,076 |
| Net assets applicable to outstanding capital stock | $40,343,572 |
| Represented by | |
| Paid in capital | 38,853,524 |
| Total distributable earnings (loss) (Note 2) | 1,490,048 |
| Total - representing net assets applicable to outstanding capital stock | $40,343,572 |
| Class A | |
| Net assets | $10,346,771 |
| Shares outstanding | 999,225 |
| Net asset value per share | $10.35 |
| Maximum sales charge | 3.00% |
| Maximum offering price per share (calculated by dividing the net asset value per share by 1.0 minus the maximum sales charge for Class A shares) | $10.67 |
| Advisor Class | |
| Net assets | $310,568 |
| Shares outstanding | 30,027 |
| Net asset value per share | $10.34 |
| Class C | |
| Net assets | $2,177,275 |
| Shares outstanding | 210,199 |
| Net asset value per share | $10.36 |
| Institutional Class | |
| Net assets | $27,372,832 |
| Shares outstanding | 2,643,796 |
| Net asset value per share | $10.35 |
| Institutional 3 Class | |
| Net assets | $136,126 |
| Shares outstanding | 13,113 |
| Net asset value per share | $10.38 |
The accompanying Notes to Financial Statements are an integral part of this
statement.
| 12 | Columbia Georgia Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Statement of Operations
Year Ended April 30, 2019
Year Ended April 30, 2019
| Net investment income | |
| Income: | |
| Dividends — unaffiliated issuers | $2,633 |
| Interest | 1,593,894 |
| Total income | 1,596,527 |
| Expenses: | |
| Management services fees | 215,081 |
| Distribution and/or service fees | |
| Class A | 27,511 |
| Class C | 25,768 |
| Transfer agent fees | |
| Class A | 14,178 |
| Advisor Class | 210 |
| Class C | 3,316 |
| Institutional Class | 41,031 |
| Institutional 3 Class | 28 |
| Compensation of board members | 14,263 |
| Custodian fees | 1,412 |
| Printing and postage fees | 8,946 |
| Registration fees | 1,284 |
| Audit fees | 33,900 |
| Legal fees | 7,261 |
| Interest on interfund lending | 151 |
| Compensation of chief compliance officer | 11 |
| Other | 9,064 |
| Total expenses | 403,415 |
| Fees waived or expenses reimbursed by Investment Manager and its affiliates | (94,096) |
| Total net expenses | 309,319 |
| Net investment income | 1,287,208 |
| Realized and unrealized gain (loss) — net | |
| Net realized gain (loss) on: | |
| Investments — unaffiliated issuers | 93,167 |
| Net realized gain | 93,167 |
| Net change in unrealized appreciation (depreciation) on: | |
| Investments — unaffiliated issuers | 640,826 |
| Net change in unrealized appreciation (depreciation) | 640,826 |
| Net realized and unrealized gain | 733,993 |
| Net increase in net assets resulting from operations | $2,021,201 |
The accompanying Notes to Financial Statements are an
integral part of this statement.
|
Columbia
Georgia Intermediate Municipal Bond Fund | Annual Report 2019
|
13 |
Table of Contents
Statement of Changes in Net Assets
|
Year
Ended
April 30, 2019 |
Year
Ended
April 30, 2018 |
|
| Operations | ||
| Net investment income | $1,287,208 | $1,644,648 |
| Net realized gain | 93,167 | 258,785 |
| Net change in unrealized appreciation (depreciation) | 640,826 | (1,666,397) |
| Net increase in net assets resulting from operations | 2,021,201 | 237,036 |
| Distributions to shareholders | ||
| Net investment income and net realized gains | ||
| Class A | (295,340) | |
| Advisor Class | (4,771) | |
| Class C | (49,659) | |
| Institutional Class | (933,187) | |
| Institutional 3 Class | (4,251) | |
| Net investment income | ||
| Class A | (396,122) | |
| Advisor Class | (5,484) | |
| Class B | (158) | |
| Class C | (58,378) | |
| Institutional Class | (1,171,724) | |
| Institutional 3 Class | (2,280) | |
| Net realized gains | ||
| Class A | (65,350) | |
| Advisor Class | (821) | |
| Class C | (13,533) | |
| Institutional Class | (165,368) | |
| Institutional 3 Class | (440) | |
| Total distributions to shareholders (Note 2) | (1,287,208) | (1,879,658) |
| Decrease in net assets from capital stock activity | (13,240,681) | (14,939,103) |
| Total decrease in net assets | (12,506,688) | (16,581,725) |
| Net assets at beginning of year | 52,850,260 | 69,431,985 |
| Net assets at end of year | $40,343,572 | $52,850,260 |
| Undistributed net investment income | $95,765 | $95,765 |
The accompanying Notes to Financial Statements are an
integral part of this statement.
| 14 | Columbia Georgia Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Statement of Changes in Net Assets
(continued)
| Year Ended | Year Ended | |||
| April 30, 2019 | April 30, 2018 | |||
| Shares | Dollars ($) | Shares | Dollars ($) | |
| Capital stock activity | ||||
| Class A | ||||
| Subscriptions | 44,293 | 453,254 | 85,581 | 897,415 |
| Distributions reinvested | 20,918 | 213,594 | 22,228 | 231,255 |
| Redemptions | (228,582) | (2,328,654) | (756,201) | (7,814,717) |
| Net decrease | (163,371) | (1,661,806) | (648,392) | (6,686,047) |
| Advisor Class | ||||
| Subscriptions | 17,365 | 178,354 | 10,245 | 108,285 |
| Distributions reinvested | 438 | 4,483 | 576 | 6,003 |
| Redemptions | (208) | (2,112) | (24,721) | (259,236) |
| Net increase (decrease) | 17,595 | 180,725 | (13,900) | (144,948) |
| Class B | ||||
| Distributions reinvested | — | — | 10 | 111 |
| Redemptions | — | — | (5,638) | (59,614) |
| Net decrease | — | — | (5,628) | (59,503) |
| Class C | ||||
| Subscriptions | 3,011 | 30,985 | 32,404 | 342,275 |
| Distributions reinvested | 4,193 | 42,825 | 6,147 | 63,966 |
| Redemptions | (98,717) | (1,007,682) | (93,795) | (981,559) |
| Net decrease | (91,513) | (933,872) | (55,244) | (575,318) |
| Institutional Class | ||||
| Subscriptions | 473,710 | 4,837,555 | 531,354 | 5,555,575 |
| Distributions reinvested | 17,602 | 179,759 | 22,580 | 235,000 |
| Redemptions | (1,556,250) | (15,837,065) | (1,286,237) | (13,398,103) |
| Net decrease | (1,064,938) | (10,819,751) | (732,303) | (7,607,528) |
| Institutional 3 Class | ||||
| Subscriptions | 856 | 8,755 | 13,467 | 141,914 |
| Distributions reinvested | 386 | 3,952 | 232 | 2,399 |
| Redemptions | (1,821) | (18,684) | (968) | (10,072) |
| Net increase (decrease) | (579) | (5,977) | 12,731 | 134,241 |
| Total net decrease | (1,302,806) | (13,240,681) | (1,442,736) | (14,939,103) |
The accompanying Notes to Financial Statements are an integral part of this
statement.
|
Columbia
Georgia Intermediate Municipal Bond Fund | Annual Report 2019
|
15 |
Table of Contents
Financial Highlights
The
following table is intended to help you understand the Fund’s financial performance. Certain information reflects financial results for a single share of a class held for the periods shown. Per share net investment income (loss) amounts are
calculated based on average shares outstanding during the period. Total return assumes reinvestment of all dividends and distributions, if any. Total return does not reflect payment of sales charges, if any. Total return and portfolio turnover are
not annualized for periods of less than one year. The portfolio turnover rate is calculated without regard to purchase and sales transactions of short-term instruments and certain derivatives, if any. If such transactions were included, the
Fund’s portfolio turnover rate may be higher.
|
Net
asset value,
beginning of period |
Net
investment income |
Net
realized and unrealized gain (loss) |
Total
from
investment operations |
Distributions
from net investment income |
Distributions
from net realized gains |
Total
distributions to shareholders |
|
| Class A | |||||||
| Year Ended 4/30/2019 | $10.17 | 0.27 | 0.18 | 0.45 | (0.27) | — | (0.27) |
| Year Ended 4/30/2018 | $10.45 | 0.26 | (0.24) | 0.02 | (0.26) | (0.04) | (0.30) |
| Year Ended 4/30/2017 | $10.88 | 0.27 | (0.37) | (0.10) | (0.27) | (0.06) | (0.33) |
| Year Ended 4/30/2016 | $10.81 | 0.29 | 0.11 | 0.40 | (0.29) | (0.04) | (0.33) |
| Year Ended 4/30/2015 | $10.82 | 0.31 | 0.01 | 0.32 | (0.31) | (0.02) | (0.33) |
| Advisor Class | |||||||
| Year Ended 4/30/2019 | $10.15 | 0.30 | 0.19 | 0.49 | (0.30) | — | (0.30) |
| Year Ended 4/30/2018 | $10.44 | 0.28 | (0.25) | 0.03 | (0.28) | (0.04) | (0.32) |
| Year Ended 4/30/2017 | $10.87 | 0.30 | (0.38) | (0.08) | (0.29) | (0.06) | (0.35) |
| Year Ended 4/30/2016 | $10.79 | 0.32 | 0.12 | 0.44 | (0.32) | (0.04) | (0.36) |
| Year Ended 4/30/2015 | $10.80 | 0.33 | 0.02 | 0.35 | (0.34) | (0.02) | (0.36) |
| Class C | |||||||
| Year Ended 4/30/2019 | $10.17 | 0.20 | 0.19 | 0.39 | (0.20) | — | (0.20) |
| Year Ended 4/30/2018 | $10.46 | 0.18 | (0.25) | (0.07) | (0.18) | (0.04) | (0.22) |
| Year Ended 4/30/2017 | $10.88 | 0.19 | (0.36) | (0.17) | (0.19) | (0.06) | (0.25) |
| Year Ended 4/30/2016 | $10.81 | 0.21 | 0.11 | 0.32 | (0.21) | (0.04) | (0.25) |
| Year Ended 4/30/2015 | $10.82 | 0.23 | 0.01 | 0.24 | (0.23) | (0.02) | (0.25) |
| Institutional Class | |||||||
| Year Ended 4/30/2019 | $10.16 | 0.30 | 0.19 | 0.49 | (0.30) | — | (0.30) |
| Year Ended 4/30/2018 | $10.45 | 0.28 | (0.25) | 0.03 | (0.28) | (0.04) | (0.32) |
| Year Ended 4/30/2017 | $10.88 | 0.30 | (0.37) | (0.07) | (0.30) | (0.06) | (0.36) |
| Year Ended 4/30/2016 | $10.81 | 0.32 | 0.11 | 0.43 | (0.32) | (0.04) | (0.36) |
| Year Ended 4/30/2015 | $10.82 | 0.34 | 0.01 | 0.35 | (0.34) | (0.02) | (0.36) |
The accompanying Notes to Financial Statements are an
integral part of this statement.
| 16 | Columbia Georgia Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Financial Highlights
(continued)
|
Net
asset value, end of period |
Total
return |
Total
gross
expense ratio to average net assets (a) |
Total
net
expense ratio to average net assets (a),(b) |
Net
investment
income ratio to average net assets |
Portfolio
turnover |
Net
assets, end of period (000’s) |
|
| Class A | |||||||
| Year Ended 4/30/2019 | $10.35 | 4.53% | 1.02% (c) | 0.81% (c) | 2.68% | 3% | $10,347 |
| Year Ended 4/30/2018 | $10.17 | 0.12% | 0.98% | 0.81% | 2.45% | 12% | $11,819 |
| Year Ended 4/30/2017 | $10.45 | (0.93%) | 1.03% | 0.81% | 2.54% | 14% | $18,934 |
| Year Ended 4/30/2016 | $10.88 | 3.78% | 1.04% | 0.81% | 2.73% | 13% | $20,377 |
| Year Ended 4/30/2015 | $10.81 | 2.98% | 1.06% | 0.81% | 2.83% | 19% | $20,060 |
| Advisor Class | |||||||
| Year Ended 4/30/2019 | $10.34 | 4.90% | 0.79% (c) | 0.56% (c) | 2.95% | 3% | $311 |
| Year Ended 4/30/2018 | $10.15 | 0.27% | 0.73% | 0.56% | 2.69% | 12% | $126 |
| Year Ended 4/30/2017 | $10.44 | (0.68%) | 0.77% | 0.56% | 2.79% | 14% | $275 |
| Year Ended 4/30/2016 | $10.87 | 4.14% | 0.79% | 0.56% | 2.98% | 13% | $250 |
| Year Ended 4/30/2015 | $10.79 | 3.24% | 0.81% | 0.56% | 3.09% | 19% | $220 |
| Class C | |||||||
| Year Ended 4/30/2019 | $10.36 | 3.85% | 1.77% (c) | 1.56% (c) | 1.93% | 3% | $2,177 |
| Year Ended 4/30/2018 | $10.17 | (0.72%) | 1.73% | 1.56% | 1.70% | 12% | $3,068 |
| Year Ended 4/30/2017 | $10.46 | (1.57%) | 1.78% | 1.56% | 1.78% | 14% | $3,733 |
| Year Ended 4/30/2016 | $10.88 | 3.01% | 1.79% | 1.56% | 1.98% | 13% | $4,996 |
| Year Ended 4/30/2015 | $10.81 | 2.21% | 1.81% | 1.56% | 2.08% | 19% | $4,612 |
| Institutional Class | |||||||
| Year Ended 4/30/2019 | $10.35 | 4.90% | 0.76% (c) | 0.56% (c) | 2.93% | 3% | $27,373 |
| Year Ended 4/30/2018 | $10.16 | 0.28% | 0.73% | 0.56% | 2.70% | 12% | $37,698 |
| Year Ended 4/30/2017 | $10.45 | (0.68%) | 0.78% | 0.56% | 2.79% | 14% | $46,421 |
| Year Ended 4/30/2016 | $10.88 | 4.04% | 0.79% | 0.56% | 2.98% | 13% | $52,315 |
| Year Ended 4/30/2015 | $10.81 | 3.24% | 0.81% | 0.56% | 3.09% | 19% | $54,037 |
The accompanying Notes to Financial Statements are an
integral part of this statement.
|
Columbia
Georgia Intermediate Municipal Bond Fund | Annual Report 2019
|
17 |
Table of Contents
Financial Highlights
(continued)
|
Net
asset value,
beginning of period |
Net
investment income |
Net
realized and unrealized gain (loss) |
Total
from
investment operations |
Distributions
from net investment income |
Distributions
from net realized gains |
Total
distributions to shareholders |
|
| Institutional 3 Class | |||||||
| Year Ended 4/30/2019 | $10.19 | 0.31 | 0.19 | 0.50 | (0.31) | — | (0.31) |
| Year Ended 4/30/2018 | $10.48 | 0.29 | (0.25) | 0.04 | (0.29) | (0.04) | (0.33) |
| Year Ended 4/30/2017 (d) | $10.41 | 0.05 | 0.07 | 0.12 | (0.05) | — | (0.05) |
| Notes to Financial Highlights | |
| (a) | In addition to the fees and expenses that the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of any other funds in which it invests. Such indirect expenses are not included in the Fund’s reported expense ratios. |
| (b) | Total net expenses include the impact of certain fee waivers/expense reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
| (c) | Ratios include interfund lending expense which is less than 0.01%. |
| (d) | Institutional 3 Class shares commenced operations on March 1, 2017. Per share data and total return reflect activity from that date. |
| (e) | Annualized. |
The accompanying Notes to Financial Statements are an
integral part of this statement.
| 18 | Columbia Georgia Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Financial Highlights
(continued)
|
Net
asset value, end of period |
Total
return |
Total
gross
expense ratio to average net assets (a) |
Total
net
expense ratio to average net assets (a),(b) |
Net
investment
income ratio to average net assets |
Portfolio
turnover |
Net
assets, end of period (000’s) |
|
| Institutional 3 Class | |||||||
| Year Ended 4/30/2019 | $10.38 | 5.00% | 0.66% (c) | 0.45% (c) | 3.04% | 3% | $136 |
| Year Ended 4/30/2018 | $10.19 | 0.39% | 0.61% | 0.46% | 2.82% | 12% | $140 |
| Year Ended 4/30/2017 (d) | $10.48 | 1.17% | 0.64% (e) | 0.43% (e) | 3.04% (e) | 14% | $10 |
The accompanying Notes to Financial Statements are an integral part of this
statement.
|
Columbia
Georgia Intermediate Municipal Bond Fund | Annual Report 2019
|
19 |
Table of Contents
Notes to Financial Statements
April 30, 2019
April 30, 2019
Note 1. Organization
Columbia Georgia Intermediate Municipal Bond Fund (formerly
known as Columbia AMT-Free Georgia Intermediate Muni Bond Fund) (the Fund), a series of Columbia Funds Series Trust (the Trust), is a diversified fund. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as
an open-end management investment company organized as a Delaware statutory trust.
Effective May 14, 2019, Columbia AMT-Free Georgia Intermediate
Muni Bond Fund was renamed Columbia Georgia Intermediate Municipal Bond Fund.
Fund shares
The Trust may issue an unlimited number of shares (without par
value). Although all share classes generally have identical voting, dividend and liquidation rights, each share class votes separately when required by the Trust’s organizational documents or by law. Different share classes pay different
distribution amounts to the extent the expenses of such share classes differ, and distributions in liquidation will be proportional to the net asset value of each share class. Each share class has its own expense and sales charge structure. The Fund
offers each of the share classes identified below.
Class
A shares are subject to a maximum front-end sales charge of 3.00% based on the initial investment amount. Class A shares purchased without an initial sales charge are subject to a contingent deferred sales charge (CDSC) of 0.75% on certain
investments of $500,000 or more if redeemed within 12 months after purchase.
Advisor Class shares are not subject to sales charges and are
generally available only to omnibus retirement plans and certain investors as described in the Fund’s prospectus.
Class C shares are subject to a 1.00% CDSC on shares redeemed
within 12 months after purchase. Effective July 1, 2018, Class C shares automatically convert to Class A shares of the same Fund in the month of or the month following the 10-year anniversary of the Class C shares purchase date.
Institutional Class shares are not subject to sales charges
and are generally available only to eligible investors, which are subject to different investment minimums as described in the Fund’s prospectus.
Institutional 3 Class shares are not subject to sales charges
and are available to institutional and certain other investors as described in the Fund’s prospectus.
Note 2. Summary of significant accounting
policies
Basis of preparation
The Fund is an investment company that applies the accounting
and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946,
Financial Services - Investment Companies
(ASC 946). The financial statements are prepared
in accordance with U.S. generally accepted accounting principles (GAAP), which requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
The following is a summary of significant accounting policies
followed by the Fund in the preparation of its financial statements.
Security valuation
Debt securities generally are valued by pricing services
approved by the Board of Trustees based upon market transactions for normal, institutional-size trading units of similar securities. The services may use various pricing techniques that take into account, as applicable, factors such as yield,
quality, coupon rate, maturity, type of issue, trading characteristics and other data, as well as approved independent broker-dealer quotes. Debt securities for which quotations are not readily available or
| 20 | Columbia Georgia Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Notes to Financial Statements
(continued)
April 30, 2019
April 30, 2019
not believed to be
reflective of market value may also be valued based upon a bid quote from an approved independent broker-dealer. Debt securities maturing in 60 days or less are valued primarily at amortized cost value, unless this method results in a valuation that
management believes does not approximate market value.
Investments in open-end investment companies, including money
market funds, are valued at their latest net asset value.
Investments for which market quotations are not readily
available, or that have quotations which management believes are not reflective of market value or reliable, are valued at fair value as determined in good faith under procedures approved by and under the general supervision of the Board of
Trustees. If a security or class of securities (such as foreign securities) is valued at fair value, such value is likely to be different from the quoted or published price for the security.
The determination of fair value often requires significant
judgment. To determine fair value, management may use assumptions including but not limited to future cash flows and estimated risk premiums. Multiple inputs from various sources may be used to determine fair value.
GAAP requires disclosure regarding the inputs and valuation
techniques used to measure fair value and any changes in valuation inputs or techniques. In addition, investments shall be disclosed by major category. This information is disclosed following the Fund’s Portfolio of Investments.
Security transactions
Security transactions are accounted for on the trade date.
Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes.
Income recognition
Interest income is recorded on an accrual basis. Market
premiums and discounts, including original issue discounts, are amortized and accreted, respectively, over the expected life of the security on all debt securities, unless otherwise noted.
The Fund may place a debt security on non-accrual status and
reduce related interest income when it becomes probable that the interest will not be collected and the amount of uncollectible interest can be reasonably estimated. A defaulted debt security is removed from non-accrual status when the issuer
resumes interest payments or when collectibility of interest is reasonably assured.
Dividend income is recorded on the ex-dividend date.
Expenses
General expenses of the Trust are allocated to the Fund and
other funds of the Trust based upon relative net assets or other expense allocation methodologies determined by the nature of the expense. Expenses directly attributable to the Fund are charged to the Fund. Expenses directly attributable to a
specific class of shares are charged to that share class.
Determination of class net asset value
All income, expenses (other than class-specific expenses,
which are charged to that share class, as shown in the Statement of Operations) and realized and unrealized gains (losses) are allocated to each class of the Fund on a daily basis, based on the relative net assets of each class, for purposes of
determining the net asset value of each class.
Federal
income tax status
The Fund intends to qualify each year
as a regulated investment company under Subchapter M of the Internal Revenue Code, as amended, and will distribute substantially all of its net tax-exempt and investment company taxable income and net capital gain, if any, for its tax year, and as
such will not be subject to federal income taxes. In addition, the Fund intends to distribute in each calendar year substantially all of its ordinary income, capital gain net income and certain other amounts, if any, such that the Fund should not be
subject to federal excise tax. Therefore, no federal income or excise tax provision is recorded.
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Table of Contents
Notes to Financial Statements
(continued)
April 30, 2019
April 30, 2019
Distributions to shareholders
Distributions from net investment income, if any, are declared
daily and paid monthly. Net realized capital gains, if any, are distributed at least annually. Income distributions and capital gain distributions are determined in accordance with federal income tax regulations, which may differ from GAAP.
Guarantees and indemnifications
Under the Trust’s organizational documents and, in some
cases, by contract, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust or its funds. In addition, certain of the Fund’s contracts with its service providers contain
general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown since the amount of any future claims that may be made against the Fund cannot be determined, and the Fund has no historical basis for predicting
the likelihood of any such claims.
Recent accounting
pronouncements
Accounting Standards Update 2017-08
Premium Amortization on Purchased Callable Debt Securities
In March 2017, the Financial Accounting Standards Board issued
Accounting Standards Update (ASU) No. 2017-08 Premium Amortization on Purchased Callable Debt Securities. ASU No. 2017-08 updates the accounting standards to shorten the amortization period for certain purchased callable debt securities, held at a
premium, to be amortized to the earliest call date. The update applies to securities with explicit, noncontingent call features that are callable at fixed prices and on preset dates. The standard is effective for annual periods beginning after
December 15, 2018 and interim periods within those fiscal years. Management does not expect the implementation of this guidance to have a material impact on the financial statement amounts and footnote disclosures.
Accounting Standards Update 2018-13 Disclosure Framework -
Changes to the Disclosure Requirements for Fair Value Measurement
In August 2018, the Financial Accounting Standards Board
issued Accounting Standards Update (ASU) No. 2018-13 Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. ASU No. 2018-13, in addition to other modifications and additions, removes the requirement to disclose the
amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy and the policy for the timing of transfers between levels. The standard is effective for annual periods beginning after December 15, 2019 and interim periods
within those fiscal years. At this time, management is evaluating the implication of this guidance and the impact it will have on the financial statement disclosures, if any.
Disclosure Update and Simplification
In September 2018, the Securities and Exchange Commission
(SEC) released Final Rule 33-10532, Disclosure Update and Simplification, which amends certain financial statement disclosure requirements that the SEC determined to be redundant, outdated, or superseded in light of other SEC disclosure
requirements, GAAP, or changes in the information environment. As a result of the amendments, management implemented disclosure changes which included removing the components of distributable earnings presented on the Statement of Assets and
Liabilities and combining income and gain distributions paid to shareholders as presented on the Statement of Changes in Net Assets. Any values presented to meet prior year requirements were left unchanged. The amendments had no effect on the
Fund’s net assets or results of operation.
Note
3. Fees and other transactions with affiliates
Management services fees
The Fund has entered into a Management Agreement with Columbia
Management Investment Advisers, LLC (the Investment Manager), a wholly-owned subsidiary of Ameriprise Financial, Inc. (Ameriprise Financial). Under the Management Agreement, the Investment Manager provides the Fund with investment research and
advice, as well as administrative and accounting services. The management services fee is an annual fee that is equal to a percentage of the Fund’s daily net assets that declines from 0.47% to 0.31% as the Fund’s net assets increase. The
effective management services fee rate for the year ended April 30, 2019 was 0.47% of the Fund’s average daily net assets.
| 22 | Columbia Georgia Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Notes to Financial Statements
(continued)
April 30, 2019
April 30, 2019
Compensation of board members
Members of the Board of Trustees who are not officers or
employees of the Investment Manager or Ameriprise Financial are compensated for their services to the Fund as disclosed in the Statement of Operations. Under a Deferred Compensation Plan (the Deferred Plan), these members of the Board of Trustees
may elect to defer payment of up to 100% of their compensation. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of certain funds managed by the Investment Manager. The Fund’s liability for these
amounts is adjusted for market value changes and remains in the Fund until distributed in accordance with the Deferred Plan. All amounts payable under the Deferred Plan constitute a general unsecured obligation of the Fund.
Compensation of Chief Compliance Officer
The Board of Trustees has appointed a Chief Compliance Officer
to the Fund in accordance with federal securities regulations. As disclosed in the Statement of Operations, a portion of the Chief Compliance Officer’s total compensation is allocated to the Fund, along with other allocations to affiliated
registered investment companies managed by the Investment Manager and its affiliates, based on relative net assets.
Transfer agency fees
Under a Transfer and Dividend Disbursing Agent Agreement,
Columbia Management Investment Services Corp. (the Transfer Agent), an affiliate of the Investment Manager and a wholly-owned subsidiary of Ameriprise Financial, is responsible for providing transfer agency services to the Fund. The Transfer Agent
has contracted with DST Asset Manager Solutions, Inc. (DST) to serve as sub-transfer agent. The Transfer Agent pays the fees of DST for services as sub-transfer agent and DST is not entitled to reimbursement for such fees from the Fund (with the
exception of out-of-pocket fees).
The Fund pays the
Transfer Agent a monthly transfer agency fee based on the number or the average value of accounts, depending on the type of account. In addition, the Fund pays the Transfer Agent a fee for shareholder services based on the number of accounts or on a
percentage of the average aggregate value of the Fund’s shares maintained in omnibus accounts up to the lesser of the amount charged by the financial intermediary or a cap established by the Board of Trustees from time to time.
The Transfer Agent also receives compensation from the Fund
for various shareholder services and reimbursements for certain out-of-pocket fees. Total transfer agency fees for Institutional 3 Class shares are subject to an annual limitation of not more than 0.02% of the average daily net assets attributable
to Institutional 3 Class shares.
For the year ended
April 30, 2019, the Fund’s effective transfer agency fee rates as a percentage of average daily net assets of each class were as follows:
| Effective rate (%) | |
| Class A | 0.13 |
| Advisor Class | 0.13 |
| Class C | 0.13 |
| Institutional Class | 0.13 |
| Institutional 3 Class | 0.02 |
An annual minimum account balance
fee of $20 may apply to certain accounts with a value below the applicable share class’s initial minimum investment requirements to reduce the impact of small accounts on transfer agency fees. These minimum account balance fees are remitted to
the Fund and recorded as part of expense reductions in the Statement of Operations. For the year ended April 30, 2019, no minimum account balance fees were charged by the Fund.
Distribution and service fees
The Fund has entered into an agreement with Columbia
Management Investment Distributors, Inc. (the Distributor), an affiliate of the Investment Manager and a wholly-owned subsidiary of Ameriprise Financial, for distribution and shareholder services. The Board of Trustees has approved, and the Fund has
adopted, distribution and shareholder service plans (the
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Table of Contents
Notes to Financial Statements
(continued)
April 30, 2019
April 30, 2019
Plans) applicable
to certain share classes, which set the distribution and service fees for the Fund. These fees are calculated daily and are intended to compensate the Distributor and/or eligible selling and/or servicing agents for selling shares of the Fund and
providing services to investors.
Under the Plans, the
Fund pays a monthly combined distribution and service fee to the Distributor at the maximum annual rate of 0.25% of the average daily net assets attributable to Class A shares of the Fund. Also under the Plans, the Fund pays a monthly service fee to
the Distributor at the maximum annual rate of 0.25% of the average daily net assets attributable to Class C shares of the Fund and a monthly distribution fee to the Distributor at the maximum annual rate of 0.75% of the average daily net assets
attributable to Class C shares of the Fund.
Sales charges
(unaudited)
Sales charges, including front-end charges
and CDSCs, received by the Distributor for distributing Fund shares for the year ended April 30, 2019, if any, are listed below:
| Amount ($) | |
| Class A | 2,563 |
Expenses waived/reimbursed by the
Investment Manager and its affiliates
The Investment
Manager and certain of its affiliates have contractually agreed to waive fees and/or reimburse expenses (excluding certain fees and expenses described below) for the period(s) disclosed below, unless sooner terminated at the sole discretion of the
Board of Trustees, so that the Fund’s net operating expenses, after giving effect to fees waived/expenses reimbursed and any balance credits and/or overdraft charges from the Fund’s custodian, do not exceed the following annual rate(s)
as a percentage of the class’ average daily net assets:
|
September
1, 2018
through August 31, 2019 |
Prior
to
September 1, 2018 |
|
| Class A | 0.81% | 0.81% |
| Advisor Class | 0.56 | 0.56 |
| Class C | 1.56 | 1.56 |
| Institutional Class | 0.56 | 0.56 |
| Institutional 3 Class | 0.45 | 0.46 |
Under the agreement governing
these fee waivers and/or expense reimbursement arrangements, the following fees and expenses are excluded from the waiver/reimbursement commitment, and therefore will be paid by the Fund, if applicable: taxes (including foreign transaction taxes),
expenses associated with investments in affiliated and non-affiliated pooled investment vehicles (including mutual funds and exchange-traded funds), transaction costs and brokerage commissions, costs related to any securities lending program,
dividend expenses associated with securities sold short, inverse floater program fees and expenses, transaction charges and interest on borrowed money, interest, infrequent and/or unusual expenses and any other expenses the exclusion of which is
specifically approved by the Board of Trustees. This agreement may be modified or amended only with approval from the Investment Manager, certain of its affiliates and the Fund. Any fees waived and/or expenses reimbursed under the expense
reimbursement arrangements described above are not recoverable by the Investment Manager or its affiliates in future periods.
Note 4. Federal tax information
The timing and character of income and capital gain
distributions are determined in accordance with income tax regulations, which may differ from GAAP because of temporary or permanent book to tax differences.
At April 30, 2019, these differences were primarily due to
differing treatment for capital loss carryforwards, trustees’ deferred compensation and distributions. To the extent these differences were permanent, reclassifications were made among the components of the Fund’s net assets. Temporary
differences do not require reclassifications.
The Fund
did not have any permanent differences; therefore, no reclassifications were made.
| 24 | Columbia Georgia Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Notes to Financial Statements
(continued)
April 30, 2019
April 30, 2019
The
tax character of distributions paid during the years indicated was as follows:
| Year Ended April 30, 2019 | Year Ended April 30, 2018 | ||||||
|
Ordinary
income ($) |
Tax-exempt
income ($) |
Long-term
capital gains ($) |
Total ($) |
Ordinary
income ($) |
Tax-exempt
income ($) |
Long-term
capital gains ($) |
Total ($) |
| — | 1,287,208 | — | 1,287,208 | — | 1,654,130 | 225,528 | 1,879,658 |
Short-term capital gain
distributions, if any, are considered ordinary income distributions for tax purposes.
At April 30, 2019, the components of distributable earnings on
a tax basis were as follows:
|
Undistributed
ordinary income ($) |
Undistributed
tax-
exempt income ($) |
Undistributed
long-term capital gains ($) |
Capital
loss
carryforwards ($) |
Net
unrealized
appreciation ($) |
| — | 291,030 | — | (28,838) | 1,423,121 |
At April 30, 2019, the cost of all
investments for federal income tax purposes along with the aggregate gross unrealized appreciation and depreciation based on that cost was:
|
Federal
tax cost ($) |
Gross
unrealized
appreciation ($) |
Gross
unrealized
(depreciation) ($) |
Net
unrealized
appreciation ($) |
| 38,057,377 | 1,423,828 | (707) | 1,423,121 |
Tax cost of investments and
unrealized appreciation/(depreciation) may also include timing differences that do not constitute adjustments to tax basis.
The following capital loss carryforwards, determined at April
30, 2019, may be available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code. Capital loss carryforwards with no expiration are required to be utilized prior
to any capital losses which carry an expiration date. As a result of this ordering rule, capital loss carryforwards which carry an expiration date may be more likely to expire unused. In addition, for the year ended April 30, 2019, capital loss
carryforwards utilized and expired unused, if any, were as follows:
|
No
expiration
short-term ($) |
No
expiration
long-term ($) |
Total ($) | Utilized ($) | Expired ($) |
| 28,838 | — | 28,838 | — | — |
Management of the Fund has
concluded that there are no significant uncertain tax positions in the Fund that would require recognition in the financial statements. However, management’s conclusion may be subject to review and adjustment at a later date based on factors
including, but not limited to, new tax laws, regulations, and administrative interpretations (including relevant court decisions). Generally, the Fund’s federal tax returns for the prior three fiscal years remain subject to examination by the
Internal Revenue Service.
Note 5. Portfolio
information
The cost of purchases and proceeds from
sales of securities, excluding short-term investments and derivatives, if any, aggregated to $1,419,960 and $15,079,394, respectively, for the year ended April 30, 2019. The amount of purchase and sale activity impacts the portfolio turnover rate
reported in the Financial Highlights.
Note
6. Interfund lending
Pursuant to an exemptive
order granted by the Securities and Exchange Commission, the Fund participates in a program (the Interfund Program) allowing each participating Columbia Fund (each, a Participating Fund) to lend money directly to and, except for closed-end funds and
money market funds, borrow money directly from other Participating Funds for temporary purposes. The amounts eligible for borrowing and lending under the Interfund Program are subject to certain restrictions.
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Table of Contents
Notes to Financial Statements
(continued)
April 30, 2019
April 30, 2019
Interfund loans are subject to the risk that the borrowing
fund could be unable to repay the loan when due, and a delay in repayment to the lending fund could result in lost opportunities and/or additional lending costs. The exemptive order is subject to conditions intended to mitigate conflicts of interest
arising from the Investment Manager’s relationship with each Participating Fund.
The Fund’s activity in the Interfund Program during the
year ended April 30, 2019 was as follows:
| Borrower or lender |
Average
loan
balance ($) |
Weighted
average
interest rate (%) |
Days
outstanding |
| Borrower | 2,200,000 | 2.47 | 1 |
Interest expense incurred by the
Fund is recorded as Interfund lending in the Statement of Operations. The Fund had no outstanding interfund loans at April 30, 2019.
Note 7. Line of credit
The Fund has access to a revolving credit facility with a
syndicate of banks led by Citibank, N.A., HSBC Bank USA, N.A. and JPMorgan Chase Bank, N.A. whereby the Fund may borrow for the temporary funding of shareholder redemptions or for other temporary or emergency purposes. The credit facility, which is
a collective agreement between the Fund and certain other funds managed by the Investment Manager or an affiliated investment manager, severally and not jointly, permits collective borrowings up to $1 billion. Interest is charged to each
participating fund based on its borrowings at a rate equal to the higher of (i) the federal funds effective rate, (ii) the one-month LIBOR rate and (iii) the overnight bank funding rate, plus in each case, 1.00%. Each borrowing under the credit
facility matures no later than 60 days after the date of borrowing. The Fund also pays a commitment fee equal to its pro rata share of the unused amount of the credit facility at a rate of 0.15% per annum. The commitment fee is included in other
expenses in the Statement of Operations. This agreement expires annually in December unless extended or renewed.
The Fund had no borrowings during the year ended April 30,
2019.
Note 8. Significant risks
Credit risk
Credit risk is the risk that the value of debt securities in
the Fund’s portfolio may decline because the issuer may default and fail to pay interest or repay principal when due. Rating agencies assign credit ratings to debt securities to indicate their credit risk. Lower rated or unrated debt
securities held by the Fund may present increased credit risk as compared to higher-rated debt securities.
Geographic concentration risk
Because the Fund invests substantially in municipal securities
issued by the state identified in the Fund’s name and political sub-divisions of that state, the Fund will be particularly affected by adverse tax, legislative, regulatory, demographic or political changes as well as changes impacting the
state’s financial, economic or other condition and prospects. In addition, because of the relatively small number of issuers of tax-exempt securities in the state, the Fund may invest a higher percentage of assets in a single issuer and,
therefore, be more exposed to the risk of loss than a fund that invests more broadly. The value of municipal and other securities owned by the Fund also may be adversely affected by future changes in federal or state income tax laws.
Interest rate risk
Interest rate risk is the risk of losses attributable to
changes in interest rates. In general, if prevailing interest rates rise, the values of debt securities tend to fall, and if interest rates fall, the values of debt securities tend to rise. Actions by governments and central banking authorities can
result in increases in interest rates. Increasing interest rates may negatively affect the value of debt securities held by the Fund, resulting in a negative impact on the Fund’s performance and net asset value per share. In general, the
longer the maturity or duration of a debt security, the greater its sensitivity to changes in interest rates.
| 26 | Columbia Georgia Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Notes to Financial Statements
(continued)
April 30, 2019
April 30, 2019
Liquidity risk
Liquidity risk is the risk associated with a lack of
marketability of investments which may make it difficult to sell the investment at a desirable time or price. Changing regulatory, market or other conditions or environments (for example, the interest rate or credit environments) may adversely
affect the liquidity of the Fund’s investments. The Fund may have to accept a lower selling price for the holding, sell other investments, or forego another, more appealing investment opportunity. Generally, the less liquid the market at the
time the Fund sells a portfolio investment, the greater the risk of loss or decline of value to the Fund. A less liquid market can lead to an increase in Fund redemptions, which may negatively impact Fund performance and net asset value per share,
including, for example, if the Fund is forced to sell securities in a down market.
Shareholder concentration risk
At April 30, 2019, one unaffiliated shareholder of record
owned 59.9% of the outstanding shares of the Fund in one or more accounts. The Fund has no knowledge about whether any portion of those shares was owned beneficially. Subscription and redemption activity by concentrated accounts may have a
significant effect on the operations of the Fund. In the case of a large redemption, the Fund may be forced to sell investments at inopportune times, including its liquid positions, which may result in Fund losses and the Fund holding a higher
percentage of less liquid positions. Large redemptions could result in decreased economies of scale and increased operating expenses for non-redeeming Fund shareholders.
Note 9. Subsequent events
Management has evaluated the events and transactions that
have occurred through the date the financial statements were issued and noted no items requiring adjustment of the financial statements or additional disclosure.
Note 10. Information regarding pending and settled
legal proceedings
Ameriprise Financial and certain of
its affiliates have historically been involved in a number of legal, arbitration and regulatory proceedings, including routine litigation, class actions, and governmental actions, concerning matters arising in connection with the conduct of their
business activities. Ameriprise Financial believes that the Fund is not currently the subject of, and that neither Ameriprise Financial nor any of its affiliates are the subject of, any pending legal, arbitration or regulatory proceedings that are
likely to have a material adverse effect on the Fund or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Fund. Ameriprise Financial is required to make quarterly (10-Q), annual (10-K) and, as necessary,
8-K filings with the Securities and Exchange Commission (SEC) on legal and regulatory matters that relate to Ameriprise Financial and its affiliates. Copies of these filings may be obtained by accessing the SEC website at www.sec.gov.
There can be no assurance that these matters, or the adverse
publicity associated with them, will not result in increased Fund redemptions, reduced sale of Fund shares or other adverse consequences to the Fund. Further, although we believe proceedings are not likely to have a material adverse effect on the
Fund or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Fund, these proceedings are subject to uncertainties and, as such, we are unable to estimate the possible loss or range of loss that may result.
An adverse outcome in one or more of these proceedings could result in adverse judgments, settlements, fines, penalties or other relief that could have a material adverse effect on the consolidated financial condition or results of operations of
Ameriprise Financial.
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Table of Contents
Report of Independent Registered Public Accounting Firm
To the
Board of Trustees of Columbia Funds Series Trust and Shareholders of Columbia Georgia Intermediate Municipal Bond Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and
liabilities, including the portfolio of investments, of Columbia Georgia Intermediate Municipal Bond Fund (formerly known as Columbia AMT-Free Georgia Intermediate Muni Bond Fund) (one of the funds constituting Columbia Funds Series Trust, referred
to hereafter as the "Fund") as of April 30, 2019, the related statement of operations for the year ended April 30, 2019, the statement of changes in net assets for each of the two years in the period ended April 30, 2019, including the related
notes, and the financial highlights for each of the periods indicated therein (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial
position of the Fund as of April 30, 2019, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended April 30, 2019 and the financial highlights for each of the periods
indicated therein in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the
Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB)
and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in
accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks
of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation
of securities owned as of April 30, 2019 by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our
opinion.
/s/PricewaterhouseCoopers LLP
Minneapolis, Minnesota
June 21, 2019
We have served as the auditor of one or more investment
companies within the Columbia Funds Complex since 1977.
| 28 | Columbia Georgia Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Federal Income Tax Information
(Unaudited)
(Unaudited)
The Fund hereby designates the following tax attributes for
the fiscal year ended April 30, 2019. Shareholders will be notified in early 2020 of the amounts for use in preparing 2019 income tax returns.
|
Exempt-
interest dividends |
|
| 100.00% |
Exempt-interest dividends. The percentage of net investment
income distributed during the fiscal year that qualifies as exempt-interest dividends for federal income tax purposes.
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Table of Contents
TRUSTEES AND OFFICERS
The
Board oversees the Fund’s operations and appoints officers who are responsible for day-to-day business decisions based on policies set by the Board. The following table provides basic biographical information about the Fund’s Trustees as
of the printing of this report, including their principal occupations during the past five years, although specific titles for individuals may have varied over the period. Under current Board policy, Trustees not affiliated with the Investment
Manager generally may serve through the end of the calendar year in which they reach the mandatory retirement age established by the Board.
Independent trustees
|
Name,
address, year of birth |
Position
held
with the Trust and length of service |
Principal
occupation(s)
during past five years and other relevant professional experience |
Number
of
Funds in the Columbia Funds complex overseen |
Other
directorships
held by Trustee during the past five years |
|
George
S. Batejan
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1953 |
Trustee since 1/17 | Executive Vice President, Global Head of Technology and Operations, Janus Capital Group, Inc., 2010-2016 | 119 | Former Chairman of the Board, NICSA (National Investment Company Services Association) (Executive Committee, Nominating Committee and Governance Committee), 2014-2016; former Director, Intech Investment Management, 2011-2016; former Board Member, Metro Denver Chamber of Commerce, 2015-2016; former Advisory Board Member, University of Colorado Business School, 2015-2018 |
|
Kathleen
Blatz
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1954 |
Trustee since 1/06 for RiverSource Funds and since 6/11 for Nations Funds | Attorney; specializing in arbitration and mediation; Chief Justice, Minnesota Supreme Court, 1998-2006; Associate Justice, Minnesota Supreme Court, 1996-1998; Fourth Judicial District Court Judge, Hennepin County, 1994-1996; Attorney in private practice and public service, 1984-1993; State Representative, Minnesota House of Representatives, 1979-1993, which included service on the Tax and Financial Institutions and Insurance Committees; Member and Interim Chair, Minnesota Sports Facilities Authority, January 2017-July 2017; Interim President and Chief Executive Officer, Blue Cross and Blue Shield of Minnesota (health care insurance), February-July 2018 | 119 | Trustee, BlueCross BlueShield of Minnesota since 2009 (Chair of the Business Development Committee, 2014-2017; Chair of the Governance Committee since 2017); Chair of the Robina Foundation since August 2013; former Member and Chair of the Board, Minnesota Sports Facilities Authority, January 2017-July 2017 |
|
Edward
J. Boudreau, Jr.
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1944 |
Chair of the Board since 1/18; Trustee since 6/11 for RiverSource Funds and since 1/05 for Nations Funds | Managing Director, E.J. Boudreau & Associates (consulting) since 2000; FINRA Industry Arbitrator, 2002-present; Chairman and Chief Executive Officer, John Hancock Investments (asset management), Chairman and Interested Trustee for open-end and closed-end funds offered by John Hancock, 1989-2000; John Hancock Mutual Life Insurance Company, including Senior Vice President and Treasurer and Senior Vice President Information Technology, 1968-1988 | 119 | Former Trustee, Boston Museum of Science (Chair of Finance Committee) 1985-2013; former Trustee, BofA Funds Series Trust (11 funds), 2005-2011 |
| 30 | Columbia Georgia Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
TRUSTEES AND OFFICERS
(continued)
Independent trustees
(continued)
|
Name,
address, year of birth |
Position
held
with the Trust and length of service |
Principal
occupation(s)
during past five years and other relevant professional experience |
Number
of
Funds in the Columbia Funds complex overseen |
Other
directorships
held by Trustee during the past five years |
|
Pamela
G. Carlton
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1954 |
Trustee since 7/07 for RiverSource Funds and since 6/11 for Nations Funds | President, Springboard — Partners in Cross Cultural Leadership (consulting company) since 2003; Managing Director of US Equity Research, JP Morgan Chase, 1999-2003; Director of US Equity Research, Chase Asset Management, 1996-1999; Co-Director Latin America Research, 1993-1996, COO Global Research, 1992-1996, Co-Director of US Research, 1991-1992, Investment Banker, Morgan Stanley, 1982-1991 | 119 | Trustee, New York Presbyterian Hospital Board (Executive Committee and Chair of Human Resources Committee) since 1996; Director, Laurel Road Bank (Audit Committee) since 2017 |
|
Patricia
M. Flynn
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1950 |
Trustee since 11/04 for RiverSource Funds and since 6/11 for Nations Funds | Trustee Professor of Economics and Management, Bentley University since 1976 (also teaches and conducts research on corporate governance); Dean, McCallum Graduate School of Business, Bentley University, 1992-2002 | 119 | Trustee, MA Taxpayers Foundation since 1997; Board of Directors, The MA Business Roundtable since 2003; Board of Governors, Innovation Institute, MA Technology Collaborative since 2010 |
|
Brian
J. Gallagher
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1954 |
Trustee since 12/17 | Retired; Partner with Deloitte & Touche LLP and its predecessors, 1977-2016 | 117 | Trustee, Catholic Schools Foundation since 2004 |
|
Catherine
James Paglia
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1952 |
Trustee since 11/04 for RiverSource Funds and since 6/11 for Nations Funds | Director, Enterprise Asset Management, Inc. (private real estate and asset management company) since September 1998; Managing Director and Partner, Interlaken Capital, Inc., 1989-1997; Managing Director, Morgan Stanley, 1982-1989; Vice President, Investment Banking, 1980-1982, Associate, Investment Banking, 1976-1980, Dean Witter Reynolds, Inc. | 119 | Director, Valmont Industries, Inc. (irrigation systems manufacturer) since 2012; Trustee, Carleton College (on the Investment Committee); Trustee, Carnegie Endowment for International Peace (on the Investment Committee) |
|
Anthony
M. Santomero
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1946 |
Trustee since 6/11 for RiverSource Funds and since 1/08 for Nations Funds | Richard K. Mellon Professor Emeritus of Finance, The Wharton School, University of Pennsylvania, since 2002; Senior Advisor, McKinsey & Company (consulting), 2006-2008; President, Federal Reserve Bank of Philadelphia, 2000- 2006; Professor of Finance, The Wharton School, University of Pennsylvania, 1972-2002 | 119 | Trustee, Penn Mutual Life Insurance Company since March 2008; Director, Renaissance Reinsurance Ltd. since May 2008; former Trustee, BofA Funds Series Trust (11 funds), 2008-2011; former Director, Citigroup Inc. and Citibank, N.A., 2009-2019 |
|
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Georgia Intermediate Municipal Bond Fund | Annual Report 2019
|
31 |
Table of Contents
TRUSTEES AND OFFICERS
(continued)
Independent trustees
(continued)
|
Name,
address, year of birth |
Position
held
with the Trust and length of service |
Principal
occupation(s)
during past five years and other relevant professional experience |
Number
of
Funds in the Columbia Funds complex overseen |
Other
directorships
held by Trustee during the past five years |
|
Minor
M. Shaw
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1947 |
Trustee since 6/11 for RiverSource Funds and since 2003 for Nations Funds | President, Micco LLC (private investments) since 2011; President, Micco Corp. (family investment business), 1998-2011 | 119 | Director, BlueCross BlueShield of South Carolina since April 2008; Board Chair, Hollingsworth Funds since 2016; Advisory Board member, Duke Energy Corp. since October 2016; Chair of the Duke Endowment; Chair of Greenville – Spartanburg Airport Commission; former Trustee, BofA Funds Series Trust (11 funds), 2003-2011; former Director, Piedmont Natural Gas, 2004-2016; former Director, National Association of Corporate Directors, Carolinas Chapter, 2013-2018 |
|
Sandra
Yeager
c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1964 |
Trustee since 12/17 | Retired; President and founder, Hanoverian Capital, LLC (SEC registered investment advisor firm), 2008-2016; Managing Director, DuPont Capital, 2006-2008; Managing Director, Morgan Stanley Investment Management, 2004-2006; Senior Vice President, Alliance Bernstein, 1990-2004 | 117 | Director, NAPE Education Foundation since October 2016 |
Interested trustee affiliated with Investment
Manager*
|
Name,
address, year of birth |
Position held with the Trust and length of service |
Principal
occupation(s) during the
past five years and other relevant professional experience |
Number
of
Funds in the Columbia Funds complex overseen |
Other
directorships
held by Trustee during the past five years |
|
William
F. Truscott
c/o Columbia Management Investment Advisers, LLC 225 Franklin St. Boston, MA 02110 1960 |
Trustee since 11/01 for RiverSource Funds and since 6/11 for Nations Funds; Senior Vice President since 2002 for RiverSource Funds and since 5/10 for Nations Funds | Chairman of the Board and President, Columbia Management Investment Advisers, LLC since May 2010 and February 2012, respectively; Chief Executive Officer, Global Asset Management, Ameriprise Financial, Inc. since September 2012 (previously Chief Executive Officer, U.S. Asset Management & President, Annuities, May 2010 - September 2012); Director and Chief Executive Officer, Columbia Management Investment Distributors, Inc. since May 2010 and February 2012, respectively; Chairman of the Board and Chief Executive Officer, RiverSource Distributors, Inc. since 2006; Director, Threadneedle Asset Management Holdings, SARL since 2014; President and Chief Executive Officer, Ameriprise Certificate Company, 2006 - August 2012. | 188 | Chairman of the Board, Columbia Management Investment Advisers, LLC since May 2010; Director, Columbia Management Investment Distributors, Inc. since May 2010; former Director, Ameriprise Certificate Company, 2006-January 2013 |
| * | Interested person (as defined under the 1940 Act) by reason of being an officer, director, security holder and/or employee of the Investment Manager or Ameriprise Financial. |
| 32 | Columbia Georgia Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
TRUSTEES AND OFFICERS
(continued)
Nations Funds refer to the Funds within the Columbia Funds
Complex that historically bore the Nations brand and includes series of Columbia Funds Series Trust. RiverSource Funds refer to the Funds within the Columbia Funds Complex that historically bore the RiverSource brand and includes series of Columbia
Funds Series Trust II.
The Statement of Additional
Information has additional information about the Fund’s Board members and is available, without charge, upon request by calling 800.345.6611, visiting columbiathreadneedleus.com/investor/ or contacting your financial intermediary.
|
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Georgia Intermediate Municipal Bond Fund | Annual Report 2019
|
33 |
Table of Contents
TRUSTEES AND OFFICERS
(continued)
The Board has appointed officers who are responsible for
day-to-day business decisions based on policies it has established. The officers serve at the pleasure of the Board. The following table provides basic information about the Officers of the Fund as of the printing of this report, including principal
occupations during the past five years, although their specific titles may have varied over the period. In addition to Mr. Truscott, who is Senior Vice President, the Fund’s other officers are:
Fund officers
|
Name,
address and year of birth |
Position
and year
first appointed to position for any Fund in the Columbia Funds complex or a predecessor thereof |
Principal occupation(s) during past five years |
|
Christopher
O. Petersen
5228 Ameriprise Financial Center Minneapolis, MN 55474 Born 1970 |
President and Principal Executive Officer (2015) | Vice President and Lead Chief Counsel, Ameriprise Financial, Inc. since January 2015 (previously Vice President and Chief Counsel, January 2010 - December 2014; officer of Columbia Funds and affiliated funds since 2007. |
|
Michael
G. Clarke
225 Franklin Street Boston, MA 02110 Born 1969 |
Chief Financial Officer (Principal Financial Officer) (2009) and Senior Vice President (2019) | Vice President, Head of North American Operations, and Co-Head of Global Operations, Columbia Management Investment Advisers, LLC, since June 2019 (previously Vice President – Accounting and Tax, May 2010 - May 2019); senior officer of Columbia Funds and affiliated funds since 2002 (previously Treasurer and Chief Accounting Officer, January 2009 - January 2019 and December 2015 - January 2019, respectively). |
|
Joseph
Beranek
5890 Ameriprise Financial Center Minneapolis, MN 55474 Born 1965 |
Treasurer and Chief Accounting Officer (Principal Accounting Officer) (2019) | Vice President — Mutual Fund Accounting and Financial Reporting, Columbia Management Investment Advisers, LLC, since December 2018 and March 2017, respectively (previously Vice President — Pricing and Corporate Actions, May 2010 - March 2017). |
|
Paul
B. Goucher
485 Lexington Avenue New York, NY 10017 Born 1968 |
Senior Vice President (2011) and Assistant Secretary (2008) | Senior Vice President and Assistant General Counsel, Ameriprise Financial, Inc. since January 2017 (previously Vice President and Lead Chief Counsel, November 2008 - January 2017 and January 2013 - January 2017, respectively); Vice President, Chief Legal Officer and Assistant Secretary, Columbia Management Investment Advisers, LLC since March 2015 (previously Vice President and Assistant Secretary, May 2010 – March 2015). |
|
Thomas
P. McGuire
225 Franklin Street Boston, MA 02110 Born 1972 |
Senior Vice President and Chief Compliance Officer (2012) | Vice President — Asset Management Compliance, Ameriprise Financial, Inc., since May 2010; Chief Compliance Officer, Ameriprise Certificate Company since September 2010. |
|
Colin
Moore
225 Franklin Street Boston, MA 02110 Born 1958 |
Senior Vice President (2010) | Executive Vice President and Global Chief Investment Officer, Ameriprise Financial, Inc., since July 2013; Executive Vice President and Global Chief Investment Officer, Columbia Management Investment Advisers, LLC since July 2013. |
|
Ryan
C. Larrenaga
225 Franklin Street Boston, MA 02110 Born 1970 |
Senior Vice President (2017), Chief Legal Officer (2017), and Secretary (2015) | Vice President and Chief Counsel, Ameriprise Financial, Inc. since August 2018 (previously Vice President and Group Counsel, August 2011 - August 2018); officer of Columbia Funds and affiliated funds since 2005. |
|
Michael
E. DeFao
225 Franklin Street Boston, MA 02110 Born 1968 |
Vice President (2011) and Assistant Secretary (2010) | Vice President and Chief Counsel, Ameriprise Financial, Inc. since May 2010. |
|
Lyn
Kephart-Strong
5228 Ameriprise Financial Center Minneapolis, MN 55474 Born 1960 |
Vice President (2015) | President, Columbia Management Investment Services Corp. since October 2014; Vice President & Resolution Officer, Ameriprise Trust Company since August 2009. |
| 34 | Columbia Georgia Intermediate Municipal Bond Fund | Annual Report 2019 |
Table of Contents
Additional information
The
Fund mails one shareholder report to each shareholder address, unless such shareholder elected to receive shareholder reports from the Fund electronically. If you would like more than one report, please call shareholder services at 800.345.6611 and
additional reports will be sent to you.
Proxy voting
policies and procedures
The policy of the Board of
Trustees is to vote the proxies of the companies in which the Fund holds investments consistent with the procedures as stated in the Statement of Additional Information (SAI). You may obtain a copy of the SAI without charge by calling 800.345.6611;
contacting your financial intermediary; visiting columbiathreadneedleus.com/investor/; or searching the website of the Securities and Exchange Commission (SEC) at sec.gov. Information regarding how the Fund voted proxies relating to portfolio
securities is filed with the SEC by August 31st for the most recent 12-month period ending June 30th of that year, and is available without charge by visiting columbiathreadneedleus.com/investor/, or searching the website of the SEC at
sec.gov.
Quarterly schedule of investments
The Fund files a complete schedule of portfolio holdings
with the SEC for the first and third quarters of each fiscal year on Form N-Q or Form N-PORT (available for filings after March 31, 2019). The Fund’s Form N-Q or Form N-PORT is available on the SEC’s website at sec.gov. The Fund’s
complete schedule of portfolio holdings, as filed on Form N-Q or Form N-PORT, can also be obtained without charge, upon request, by calling 800.345.6611.
Additional Fund information
For more information about the Fund, please visit
columbiathreadneedleus.com/investor/ or call 800.345.6611. Customer Service Representatives are available to answer your questions Monday through Friday from 8 a.m. to 7 p.m. Eastern time.
Fund investment manager
Columbia Management Investment Advisers, LLC
225 Franklin Street
Boston, MA 02110
Fund distributor
Columbia Management Investment Distributors, Inc.
225 Franklin Street
Boston, MA 02110
Fund transfer agent
Columbia Management Investment Services Corp.
P.O. Box 219104
Kansas City, MO 64121-9104
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|
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Table of Contents
Columbia Georgia Intermediate Municipal Bond Fund
P.O. Box 219104
Kansas City, MO 64121-9104
Please read and consider the investment objectives, risks,
charges and expenses for any fund carefully before investing. For a prospectus and summary prospectus, which contains this and other important information about the Fund, go to
columbiathreadneedleus.com/investor/ . The Fund is distributed by Columbia Management Investment Distributors, Inc., member FINRA, and managed by Columbia Management Investment Advisers, LLC.
columbiathreadneedleus.com/investor/ . The Fund is distributed by Columbia Management Investment Distributors, Inc., member FINRA, and managed by Columbia Management Investment Advisers, LLC.
Columbia Threadneedle Investments (Columbia Threadneedle) is
the global brand name of the Columbia and Threadneedle group of companies. All rights reserved.
© 2019 Columbia Management Investment Advisers, LLC.
columbiathreadneedleus.com/investor/
ANN152_04_J01_(06/19)
Table of Contents
Item 2. Code of Ethics.
| (a) |
The registrant has adopted a code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party. |
| (b) |
During the period covered by this report, there were not any amendments to a provision of the code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, and that relates to any element of the code of ethics definition enumerated in paragraph (b) of this Item. |
| (c) |
During the period covered by this report, there were no waivers, including any implicit waivers, from a provision of the code of ethics to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party that relates to one or more of the items set forth in paragraph (b) of this Item. |
Item 3. Audit Committee Financial Expert.
The registrant’s Board of Trustees has determined that Pamela G. Carlton, Anthony M. Santomero, Brian J. Gallagher and Catherine James Paglia, each of whom are members of the registrant’s Board of Trustees and Audit Committee, each qualify as an audit committee financial expert. Ms. Carlton, Mr. Santomero, Mr. Gallagher and Ms. Paglia are each independent trustees, as defined in paragraph (a)(2) of this item’s instructions.
Item 4. Principal Accountant Fees and Services .
Fee information below is disclosed for seven series of the registrant whose reports to stockholders are included in this annual filing.
(a) Audit Fees. Aggregate Audit Fees billed by the principal accountant for professional services rendered during the fiscal years ended April 30, 2019 and April 30, 2018 are approximately as follows:
| 2019 | 2018 | |||
|
$222,000 |
$ | 205,000 | ||
Audit Fees include amounts related to the audit of the registrant’s annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years.
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(b) Audit-Related Fees. Aggregate Audit-Related Fees billed to the registrant by the principal accountant for professional services rendered during the fiscal years ended April 30, 2019 and April 30, 2018 are approximately as follows:
| 2019 | 2018 | |||
|
$0 |
$ | 0 | ||
Audit-Related Fees include amounts for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant’s financial statements and are not reported in Audit Fees above.
During the fiscal years ended April 30, 2019 and April 30, 2018, there were no Audit-Related Fees billed by the registrant’s principal accountant to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for an engagement that related directly to the operations and financial reporting of the registrant.
(c) Tax Fees. Aggregate Tax Fees billed by the principal accountant to the registrant for professional services rendered during the fiscal years ended April 30, 2019 and April 30, 2018 are approximately as follows:
| 2019 | 2018 | |||
|
$20,300 |
$ | 20,200 | ||
Tax Fees include amounts for the review of annual tax returns, the review of required shareholder distribution calculations and typically include amounts for professional services by the principal accountant for tax compliance, tax advice and tax planning.
During the fiscal years ended April 30, 2019 and April 30, 2018, there were no Tax Fees billed by the registrant’s principal accountant to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for an engagement that related directly to the operations and financial reporting of the registrant.
(d) All Other Fees. Aggregate All Other Fees billed by the principal accountant to the registrant for professional services rendered during the fiscal years ended April 30, 2019 and April 30, 2018 are approximately as follows:
| 2019 | 2018 | |||
|
$0 |
$ | 0 | ||
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All Other Fees include amounts for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) above.
Aggregate All Other Fees billed by the registrant’s principal accountant to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for an engagement that related directly to the operations and financial reporting of the registrant during the fiscal years ended April 30, 2019 and April 30, 2018 are approximately as follows:
| 2019 | 2018 | |||
|
$225,000 |
$ | 225,000 | ||
In fiscal years 2019 and 2018, All Other Fees primarily consists of fees billed for internal control examinations of the registrant’s transfer agent and investment adviser.
(e)(1) Audit Committee Pre-Approval Policies and Procedures
The registrant’s Audit Committee is required to pre-approve the engagement of the registrant’s independent auditors to provide audit and non-audit services to the registrant and non-audit services to its investment adviser (excluding any sub-adviser whose role is primarily portfolio management and is sub-contracted or overseen by another investment adviser (the “Adviser”) or any entity controlling, controlled by or under common control with the Adviser that provides ongoing services to the Fund (a “Control Affiliate”) if the engagement relates directly to the operations and financial reporting of the registrant.
The Audit Committee has adopted a Policy for Engagement of Independent Auditors for Audit and Non-Audit Services (the “Policy”). The Policy sets forth the understanding of the Audit Committee regarding the engagement of the registrant’s independent accountants to provide (i) audit and permissible audit-related, tax and other services to the registrant (“Fund Services”); (ii) non-audit services to the registrant’s Adviser and any Control Affiliates, that relates directly to the operations and financial reporting of a Fund (“Fund-related Adviser Services”); and (iii) certain other audit and non-audit services to the registrant’s Adviser and its Control Affiliates. A service will require specific pre-approval by the Audit Committee if it is to be provided by the Fund’s independent auditor; provided, however, that pre-approval of non-audit services to the Fund, the Adviser or Control Affiliates may be waived if certain de minimis requirements set forth in the SEC’s rules are met.
Under the Policy, the Audit Committee may delegate pre-approval authority to any pre-designated member or members who are independent board members. The member(s) to whom such authority is delegated must report, for informational purposes only, any pre-approval decisions to the Audit Committee at its next regular meeting. The Audit Committee’s responsibilities with respect to the pre-approval of services performed by the independent auditor may not be delegated to management.
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On an annual basis, at a regularly scheduled Audit Committee meeting, the Fund’s Treasurer or other Fund officer shall submit to the Audit Committee a schedule of the types of Fund Services and Fund-related Adviser Services that are subject to specific pre-approval. This schedule will provide a description of each type of service that is subject to specific pre-approval, along with total projected fees for each service. The pre-approval will generally cover a one-year period. The Audit Committee will review and approve the types of services and the projected fees for the next one-year period and may add to, or subtract from, the list of pre-approved services from time to time, based on subsequent determinations. This specific approval acknowledges that the Audit Committee is in agreement with the specific types of services that the independent auditor will be permitted to perform and the projected fees for each service.
The Fund’s Treasurer or other Fund officer shall report to the Audit Committee at each of its regular meetings regarding all Fund Services or Fund-related Adviser Services provided since the last such report was rendered, including a description of the services, by category, with forecasted fees for the annual reporting period, proposed changes requiring specific pre-approval and a description of services provided by the independent auditor, by category, with actual fees during the current reporting period.
*****
(e)(2) 100% of the services performed for items (b) through (d) above during 2019 and 2018 were pre-approved by the registrant’s Audit Committee.
(f) Not applicable.
(g) The aggregate non-audit fees billed by the registrant’s accountant for services rendered to the registrant, and rendered to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for the fiscal years ended April 30, 2019 and April 30, 2018 are approximately as follows:
| 2019 | 2018 | |||
|
$245,300 |
$ | 245,200 | ||
(h) The registrant’s Audit Committee of the Board of Directors has considered whether the provision of non-audit services that were rendered to the registrant’s adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, is compatible with maintaining the principal accountant’s independence.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
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Item 6. Investments
| (a) |
The registrant’s “Schedule I – Investments in securities of unaffiliated issuers” (as set forth in 17 CFR 210.12-12) is included in Item 1 of this Form N-CSR. |
| (b) |
Not applicable. |
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
There were no material changes to the procedures by which shareholders may recommend nominees to the registrant’s board of directors.
Item 11. Controls and Procedures.
| (a) |
The registrant’s principal executive officer and principal financial officer, based on their evaluation of the registrant’s disclosure controls and procedures as of a date within 90 days of the filing of this report, have concluded that such controls and procedures are adequately designed to ensure that information required to be disclosed by the registrant in Form N-CSR is accumulated and communicated to the registrant’s management, including the principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. |
| (b) |
There was no change in the registrant’s internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies
Not applicable.
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Item 13. Exhibits.
(a)(1) Code of ethics required to be disclosed under Item 2 of Form N-CSR attached hereto as Exhibit 99.CODE ETH.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit 99.CERT.
(a)(3) Not applicable.
(b) Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)) attached hereto as Exhibit 99.906CERT.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| (registrant) Columbia Funds Series Trust | ||
| By (Signature and Title) | /s/ Christopher O. Petersen | |
| Christopher O. Petersen, President and Principal Executive Officer | ||
| Date June 21, 2019 | ||
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| By (Signature and Title) | /s/ Christopher O. Petersen | |
| Christopher O. Petersen, President and Principal Executive Officer |
| Date June 21, 2019 | ||
| By (Signature and Title) | /s/ Michael G. Clarke | |
| Michael G. Clarke, Chief Financial Officer | ||
| Date June 21, 2019 | ||